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

I'd like to welcome you at the conference for media and investors for discussing the financial results of TAURON for 2024. We have the Management Board, Grzegorz Lot, the President; Mr. Golebiowski, Vice President for Trading; Mr. Orlowski for Assets and Development; and Mr. Krzysztof Surma, Vice President for Financial, the CFO. My name is Miroslawa Karpinska. I'm the press team of TAURON Poland Energy. The schedule of today's meeting shall be as follows; the presentation shall be in Polish with simultaneous translation into English. In parallel, this meeting could be heard by way of a teleconference. Questions may be asked in 2 ways from the room. I will ask to present yourself and asking 3 questions at most in the series. Questions can also be sent through at tag, which is available at the web page of our transmission. After the conference, we will hold a question-and-answer session. The President will take the floor.

We have Mr. [ Kakuz ], who is for the Strategy Development, Mr. [indiscernible], the Communications teams. We have also persons. So many things are happening. The strength of women in our structures is very, very high. A lot depends of our female colleagues and of our male colleagues too. A year ago, we had met at this conference in part by telecommunications or directly. We are taking into consideration the interest of investors, the society, people, the economy and that's how things are happening. That's how the things we're doing at the company are happening. We are taking into consideration a variety of perspectives, hence, our decision for such advanced implementation of the RES, which takes into consideration all these components and this perspective is very important for us. On the 7th of March, we commenced cooperation with TAURON with EUs. The value of shares that was PLN 3.06, the market value of PLN 0.36 billion, PLN 376 million at the end of the year. And on the 31st of March, with -- value was PLN 4.95. And for the first time, the shares exceeded PLN 5, 1 hour ago, it was PLN 4.73. So it's a good message that the value of the company is increasing. We can see -- we have more than 60% growth. Of course, this depends on the stock price, of course. It's important to see that we are creating value and this value is higher year-on-year. I think that we will not stop with this. Just before this meeting, we had received a number of questions. One of the main questions was whether we, as the management, uphold our dividend policy? Yes, we do, absolutely, we do. This is -- this is a respect to our shareholders. We have given an explicit communication that we will pay dividend for 2028, starting with 2028. Let's go next. Several information, according to our assumptions and you've asked for that and your requests are important to us. There are 45 minutes of presentation, then we will be at your disposal. I understand that the questions will be hard and difficult to answer. That's what we're awaiting. Krzysztof will tell, we had excellent economic result, PLN 6.5 billion EBITDA. We have exceeded the previous year's results, 1.7 is debt ratio, the very low. It's at a good level. The investment rating has been maintained. Of the important things, we've done some very hard work to obtain a loan from the restructuring plan, that's PLN 11 billion. That's a lot of money. That's the money we want to use for our investments. You ask us to change the presentation of results and Krzysztof said that we have changed the model of reevaluating the balance difference and we are meeting your requirements. You asked about the changes in distribution year-on-year and we does also work on that, we've done that. You also ask us to present the economic debt of the company and this will be shown for the first time using the model that you asked as analyst. The internal element of our structure is that proves how we are changing the assets we have approved by the end of December in 3 tours. I don't want to say when were the previous, but in these 3 ones, we've approved the plan, all the iterations can be confirmed and approved by the Supervisory Board in mid-January. This shows our determination and how we organize our work. And second thing, we were able to establish the tax group. We have to show it to you the group -- the tax group has been maintained and we made such a reversal, which has ended happily for us, but this required a lot of work for us to be done. Krzysztof will tell how did that work look like. We are going to talk in detail about the financial results. This year is also an year of very heavy organizational effort. We have made a lot of changes in staff in the management and the managerial positions. We have also performed assessment, the development of our staff and created individual development plans for a company that will be individual development plans for each of the manager. We have introduced a state-of-the-art for us business model based on business unit. We manage business unit. We have distribution, generation, heat and sales, irrespectively of how internally our structure used to us -- the companies are just operational models. We manage the business units. We earn money on the distribution. We will show the results, the investment, but the vision into the companies of our group is of secondary importance. We have also undertaken social dialogue with people separating out carbon assets. We have also detaching some of assets. We are meeting regularly with our employees, both male and females. We visit individual units. We have been in Siersza, Laziska, Jaworzno. We've talked to the people, presented our strategy and solutions that we are employing for each of the areas. Michal will tell you how do we imagine the future because we are fighting for the power market. We want to sell our markets. Our 200-megawatt units are very important for trading power. This is very important in transformation period, and we are also ready to offer this on the market using the model of annual auctions. And also, we are able to extend the operation of those units until 2030 or maybe 2035. Each year above 2028 will require a different power contracting model because it requires a different approach to investments into revamping. This has to be planned and this cannot be done later on year-on-year. I am proud to say that in this period of time, we have almost attained parity, not 50 by 50, but we have in the entire group, more than 32% share of women in our bodies. They have high contribution to organization. They support it. They strengthened the organization. And this mix of knowledge and mix of success is very stimulating for all of us. We had prepared the RES. We have prepared reports. You know what -- how difficult is to create the reports. We had several work months of very high effort to do this work together with the consultant. This has been approved. We are very determined to implement this and we believe and we are happy to see the initiatives that we can simplify this, make it more lean and operate it without high bureaucracy. We know that the report, so -- we're repeating the same working model, create great effort, but we can attain the same effect by making it more lean. We're waiting for the omnibus effects and other initiatives that we have undertaken. Audits and compliance, I will show you the statistics. We are working on the audits for us. Audits is something from an independent unit and compliance our reporting to the Audit Committee. We have implemented the highest available standards for both areas and we are doing those activities to improve our structure, improve efficiency, lower the risk. I will show with statistics in just a moment. Some other things that are super important for us. On the 17th of December, we announced our strategy, new strategy. This strategy was prepared by us. There was no consultant working on that externally. Our own teams created those new strategy. We will cooperate with consultants and advisers in implementing this because the external knowledge available is very needed by us. Internally, in the wider managerial group in which we have directors and the companies, we have created our own outdoor program. We know what we want to attain the future. This also establishes a sponsoring strategy for the future, which reflects what we do in the media and in promotions. And of course, this is based on all the operating strategies of the individual businesses. Michal and Piotr will tell about the details. We are determined to implement the RES. We have implemented already Miejska Gorka. We had a number of difficult questions from you, and we're still awaiting for more questions. We are determined to implement those projects. We are implementing those projects which are generating profits and create value. This is -- Miejska Gorka has been purchased. We won the auction for power warehouses, 277 megawatts. We have implemented the first pumping power station in Roznow. We are working on the dam structures. We -- first of all, we have to divide this between the businesses generating of energy and responsibility for preventing flooding. You know how did that look in September of the previous year and you can see our work on that. We are intensively working on separating these 2 issues and obtain express financing for safety. In distribution, we have implemented our outlays. We have 300,000 new clients. We have more than 1.5 million clients, new clients with intelligent meters. We plan to implement more of these digitation. We are communicating about that this client perspective is super important for the clients. We have created a special area for cooperating with the client in the each geographical unit, we have added [ technical ] persons, responsible clients were not ideal, but improving month-by-month. I'd like to say, it's very blatant, but the process of issuing permits is also available on e-forms and this will be in a professional database system. Distribution has been opened to clients for a long time. We've been maintaining dialogue with the client. Since we did plan expanding of our net grid, and we work together with clients and businesses to asking for their local needs, and we are able to invest by ourselves being a responsible business. Our money to develop the area to create new investments to bring new people, new businesses and develop the business and people that's our offer to local governments and local people. We are building the area together and such initiatives have been already implemented and are continue to be implemented. As for conventional energy, then we have the Jaworzno power plant, the 910 megawatts, we stabilized it. The 200-megawatt units are the power units. We've been fighting for those. There will be annual power auctions. We're preparing for those actions. And for this year, we have done a lot of cost optimization to be better prepared because we want to win those actions. In each of those options and locations, we have the ability to convert to biomass or RDF like in Siersza and in other units to go from pickers to storage, et cetera. But I don't want to take Michal's presentation away from him. All this has been communicated to the local subgovernments and to our people wherever we are working in conventional energy, we will continue to maintain my business being responsible to be -- to conduct a fair transformation. The employees who will be subject to exclusion will find another work in our organization. We do a lot of CapEx everywhere. Those people will change their jobs, but we'll have jobs offered to them in our company if they wish to. That helps us to obtain public assessment. We know that no transformation is possible without public acceptance. The local sub-governments have also our assurance, telling them that we will be there, we will invest in each of the objects and we will cooperate with local sub-governments to create investments, to create tax revenue to enable the state governments to cooperate. And we are able to show to each location what we plan to do. Everything will be optimized, of course and change, but the base model is already ready and going. In the heating, I will not develop that. We will use decarbonization and have the objects being implemented. We have tenders for the engines and the projects are being implemented. And last thing, this is a separate overhead because everything what we are doing is for the shareholders, for the employees, for the client. We have 6 million clients, and this is our light motive for our cooperation. The model that we have implemented last year and is operating, Piotr will update and can develop that it's a model of allocation of energy from our risk asset to final clients. This is a model that we build our competitive advantage. If we invest, if we buy PPA model, then we have to know that the cost of production in those source in the long-term perspective are acceptable and are possible to be allocated to the final client. That's our basic business. So, besides return on investments and are the indices that Krzysztof and Michal will be telling you about our main component is to have the price of elected energy for the client be acceptable and that how acceptable both for households and large businesses. We have 160,000 clients, households and SMEs, which are in the new model for 9-year contracts, 100 green energy, 9 years of price guaranteeing. So we are building our assets. We build our ecosystem of distributed storages, heat storages and large [ colleges ] and we are open also for PPA and we signed contracts for PPA, which make our structure more green. Digitization is something which is super important for us. This improves quality, improves relationships with clients and also contacts with clients, also improves ecology because we remove paper. 3 million clients have e-invoices, 2 million of users have my TAURON application. You've already heard that our intention is to involve our clients, involve clients are clients with whom we can build new models. And they were also able to get the cheapest electric energy. We're talking about dynamic tariffs both in distribution and in heat. That was the first step. We are testing a new model here. It's not on mass scale as yet. Some of the clients have adopted it, and Piotr will tell you if you will be interested, what are the economic effects of that. It is our common declaration on the 21st of June, we will show another update of the offer. This will be a dynamic tariff for mass scale. It will take into consideration benefits from dynamics of change and also certain security and safety of a client that doesn't want to play with the electric energy prices. On the 21st of June, we'll present also a new e-invoice, of course, and new e-paper invoice, a simplified invoice. We'll also show the new offer, and we'll offer to all our clients' possibilities associated with advice the client on his profile, if you will have a client, he will be able to select his most economic tariff, G11, G13 and other tariffs. The client will be able to see what he can achieve and he will also know what to -- how to decrease the use of energy by his own behavior. There will be more risk, more digitization, more storages and more tools will be available and the higher will be the change -- chance that the price of energy will be lower. We have to also remember that this will depend on client behavior and clients will behave like professionals. We will help them. We will educate them. We'll provide them with tools, and we will take most of those matters on ourselves. And we are prepared that 80% of our clients of the SMEs are people who are working on certain product from us, either auction products or tariffs could be passed already because -- so if a client has a tariff, he can negotiate with us and he can contract with us. I think this is all. The last communication on my part is before I become silent is what I have undertook in the period until March to March 2025, we have done 43 audits, audits by us. I understood both investigative audits where we check for various irregularities, but most of those were the audits generated and activated because we see certain risk, certain deficiencies and certain ways of improving that we want to implement. The majority of these audits were in the house, by in-house auditors, very professional, capable of doing all this. We filed a number of notifications to the prosecurity authorities. They were sponsoring and gifts. We have 16 notification of those employees and just a few notifications being under preparation, but -- we have 15 audits which are ongoing and we have a very concrete audit plan for 2025, which is being agreed with the Supervisory Board in accordance with state-of-the-art of auditing. If you ask me when will we stop doing audits and I will tell you back that we will never do that because we can always improve on something. Every year, we'll have audit plans. The plans will be implemented as long we are in the management and as well as our successor will have something to improve, and we will do improve by doing audits. Thank you.

So, Vice President of Management Board for Trading before Krzysztof, who speaks after me, will present the earnings, I'd like to describe for you the topography of the terrain to "speaking metaphorically, what was the situation regarding the fundamental market, the indices, and I will move on to describing how our units were operated and the business units, specific business units, what's the impact, commercial impact upon what was seen in the earnings. Let's start with the fact that all the indices that we are interested are falling. That's a trend that's been underway since 2023. Regarding the hard coal prices, the PSM 1 prices index went down by 31%. Regarding the ARA coal, it's 14.5% fall. And as you know, vis-a-vis indices that the synthetic indices. They do not reflect directly the fuel policy of the energy group, including our own. And nevertheless, they are a certain benchmark. In addition, we were dealing and that's a trend that we've been observing for a long time is a decline of the CO2 prices, the carbon credit, CO2 emission allowances prices, 20% from EUR 59 in '23 to around EUR 63.5, which was caused, among others, the high generation from renewables, the lack of heat waves and relatively stable operation of nuclear powered units in France. What did it bring about? It brought about, first of all, the fact that our main indices of the forward market on the Polish Power Exchange dropped and we are talking about the [ CAL ] product '24, talking about the '23 year and CAL '25, talking about the '24 index by 33%. Also, this led to events that took place regarding the spot market. The lower level of coal prices and carbon credit prices was the main factor behind the decline of prices, which went down by about 19%. This was also impacted definitely by the event called the change of balancing market. In June, we generated strong pricing signals such as extremely high price at the second half of the year, including also the negative price. For the first time, we're dealing with negative prices. We're about 186 hours with negative prices. So 2% of duration of negative prices, which had an impact of a number of circumstances about dispatching of those units by the TSO, as well as outdoor dispatching, which we implemented actively. Let me just add, since I mentioned that in the context of limiting the production from the photovoltaic farms and wind farms, we're dealing situation regarding our farms, the curtailment was about 30 gigawatt hours, including 34 gigawatt hours was auto dispatching. So, we're anticipating certain projected element regarding the situation where we can expect negative prices, we were switching off our units ourselves. And thanks to that, we were able to secure, first of all, the hedge potential lost revenue and not cause any additional bottlenecks regarding the dispatching performed by the transmission system operator. So what follows? That was the characteristics of pricing situation. Now regarding how it impacted the CDS of first degree margins or the difference between market price and the variable cost. As you can see on the drawing in the right hand corner at the bottom, but the CDS since 2023, practically, the CDS is at the negative level or close to 0 regarding the light blue graph. This is a reflection of the CDS on the low-efficiency generation units, the so-called 200-megawatt units. The dark blue line is a reflection of the situation on the high-efficiency unit. In our case, [ Visa ], Nowe Jaworzno Grupa TAURON and Laziska units. And you can see that it unambiguously indicates the time of easy moneymaking for the conventional energy is done. It's finished. We are dealing with a situation where it's not possible to place on the forward market contracts and obtaining positive margin and we have to deal with it in a different way. That's the way we were dealing with it in 2024 moving on. Due to the situation regarding the TAURON generation despite of the high dispatchability availability of units was reaching 75% regarding the high efficiency Nowe Jaworzno Grupa TAURON and Laziska units. We were contracting at the potential of 40% of contracting options, those units. The production of electricity came in about 8 terawatt hours was 12% lower than 2023. Mainly the units regarding the futures contract, mainly we've contracted the new Nowe Jaworzno units and Laziska unit. But as a backup, we had the 200-megawatt units, except for those that have some for situation related to the power plant of heating systems what we had to be secured due to the production of heat in the given regions. Mainly, it was applicable to Roznow 2 and one of the Laziska unit and that was the situation. Regarding -- and the entire wave of actions shifted to the second half of the year because the tariff of the balancing market was introduced when we had an option, had another exchange, so ability to submit bids for the balancing capacity for primary and secondary regulation, the restoration regulation, where we are an active participant, but the activity was limited to 15% regarding 2024. This is a much higher activity now. And that meant that our whole intensity of activities was targeted and that's why the way you can see that as part of this market, we increased the trading on the balancing market by more than 60%, 160% of year '23 trading by limiting the activities on the spot market. Regarding the TAURON heat line of business unit, the situation also of another year, we are dealing with a situation where only the high generation units are operating, which are supporting the district heating system. And that was exactly the situation in 2024. In summer, we were only in the original first plans, the assumption was that the conventional unit in [ Tehe ] would be operated, but the contract was supposed to be taken over by the biomass-fired unit. The biomass-fired unit due to a failure couldn't be operated during summer. Therefore, we had an opportunity to generate this heat in the region of 11 megawatts is required from the hard coal-fired boilers in this case. So, however, the pattern that you can observe, the units are operating in the condensation, they are not operated is due to the fact that the ability to obtain positive margin is highly limited now. Only under such a mode of regime, those units can be operated. Regarding TAURON Cieplo or TAURON Heat, own in-house generation was -- production was 700 gigawatt hour, so 20% less than 2023. Regarding the renewables, we produced more than 1.5 terawatt hour of electricity and this is 6% more versus 2023. But it's difficult to compare. So around 123 megawatts of newly commissioned wind capacity and 55 megawatts in the PV capacity. This increased the production, which was offset by the worse hydrological conditions with a decline of production by our hydroelectric power plants. And the most important factor degrading the production was, of course, the flood effects where our 12 hydro power plants were -- had a failure. And now I think in 4, maybe or 5 -- around 5 have been brought back online. Sorry, doubts about what is the status now. We have some kind of echo here, please. Could you correct that? Okay. Regarding generally where we placed our activities, so in such a simple balance, 26.5 terawatt hours we needed regarding the supply market. We generated 10 terawatt hours. Therefore, the simple balance, we had to buy about 17 terawatt hours from the wholesale market. That what happened under the futures market, we bought 25% and 28% on the spot market and 9% on the balancing market. That's regarding the sources, excuse me, because [indiscernible] asked me to speak about the issue regarding TAURON supply. So 26.5 terawatt hours of sales, that's about 13% less than 2023. This was -- what contributed to that was the balance of losses versus gains regarding the contracts for large business customers. This is the first thing that was also impacted by the prosumers generation. Now we are dealing more than 2 terawatt hours of electricity of TAURON prosumers generated by the distributed installations that's about 17% more. Regarding the net billing, that's more than 80% more than 2023. Regarding the net metering, that's about 9%. At the average level of auto consumption only 29%. So this is visible in this balance. Grzegorz also mentioned the new energy issue, that's an unprecedented event. In June, we announced this project that we will be placing our entire renewables energy with our customers. At the end of the year, we had 96,000 customers using this product. These are the products regarding the mass customers, 9-year long products with a fixed price regarding the business customer, about 5-year term products depending upon the customer preferences. Now it's about 160,000 customers, which was brought about the increase of percentage of loyalty building. In '23, we had 41% of the market was under the loyalty program and 45% in '24. So about 100,000 customers accepted that product and a lot of customers using the tariff products were interested in this product. It's our opinion and we were not wrong regarding that the period of anxiety, the war, the [ juxtaposition ] that led to the price fluctuations, all kinds of support systems and shielding system led to a situation where the demand for stability in terms of cost. And that's how one could characterize the end of this year, but a lot of customers needed the stability. That's all from me for now. Thank you.

Let me take over now after Piotr before I move on to describing -- talking about the data. Before I move on to discussing the financial data, let me present the 3 issues that will be already had or might potentially have had an impact upon our results. Grzegorz already announced those topics. The first topic is the loan from CEZ KPO, national recovery plan. We again bring up this topic. Let us remember, it's PLN 11 billion, unprecedented loan in the history of our group. I think unprecedented loan in the history of Poland. Even if individual energy groups already obtained those loans, but let us remember, we were the first one, we obtained the entire national recovery plan that was available last year. That was the highest single loan for any energy group or even in taking account what happened today. Let's remember that in the other group's 2 entities, we're using this type of support. What's important that loan, it is very long-term. The repayment comes finally 2049 and its interest in term is 0.5%. This is, of course, very beneficial and should have a positive impact upon the net earnings of our group. And this at the same time, emphasize our termination of our abilities to carry out investment project in the distribution line of business. PLN 11 billion and I think, we made our strategy very highly credible that we announced December 17 last year. What ahead of us regarding this loan since I can brag that the first money already has been drawn in the first quarter. So we'll have to show the accounting. Definitely, it will be something for some of the people not so interesting, but the financial guys, yes, because we will have to apply IFRS 20 and the booking accounting for this financing will not be so obvious as it might seem. So the carrying amount -- nominal carrying amount on the balance sheet will be different from the nominal value of liability that we took on. But just let me just warn about it little bit after Q1, I'll speak more about that. The second topic that we raised last year, and we promised that we deal with that, we said that we need another year and we'll change something regarding that. So we changed the model of revaluation of the balancing difference. Here, probably for you and for us, it wasn't comfortable that the results, the distribution line of business were fluctuating very strongly year-over-year, but was due to the very rapid changes in the electricity market. As a consequence, the cost of purchasing electricity for the needs of -- for purpose of balancing difference. This had a big impact upon the earnings of the distribution line of business. Here, we decided to rework this model inside the group. And finally, in quarter 4 last year, we managed to develop to work out this model. Its main idea was to change the way settlements of electricity between supply and distribution lines of business. So it does have an impact -- direct impact upon the cash flow outside, but has an impact upon the cash flow between the individual subsidiaries. And finally, it has an impact upon the presentation of the earnings within our group, especially regarding the distribution line of business. Now this model, in our opinion, meant that the earnings, the results in the distribution in other segments as well will be comparable year-over-year and this change is very important. We applied retroactively. So, we adjusted the opening balance of 2023, when we adjusted the entire results of the entire '23. And accordingly, we adjusted the results of individual quarters in 2024. What I'll present further on in the presentation includes this adjustment regarding the revaluation model. Here, an important piece of information, we consider this revaluation model to be the first step to a final implementation of the actual model either based on the AMI meters, we have the opinion that it will be fully compatible now and earnings to that will not have those differences where we were showing the previous years year-over-year. And the final topping the problematic controversial topic that Grzegorz mentioned the status of tax capital group. Let me confirm right to start with, we maintain the status. What happened last year, we're doing very structuring recognition within our group. We are merging subsidiaries to limit the list of cost during one of the mergers, the parity of exchange or swap was wrongly calculated. This parity could have a potential impact on the loss of our tax capital group status. However, in the group, we noticed this mistake. Let me correct certain press headlines saying that the tax office saw this mistake. We were the first one to notice this mistake and we informed the tax office about what had happened. And at the same time, our subsidiary filed a claim to declare and void the resolution then included an obvious calculation error, court agreed with our position and declared that resolution void. And then based on this ruling of the court, the KRS, National Court Register restore the decision from the moment from -- to the time before the merger. So in other words, expand the entire merger that was carried out based on the wrong parity. In the meantime, the tax office, knowing the situation what regulation was breached, filed the petition to declare the tax capital void. We appealed against the decision. We stated that the tax office should take the action only once. The final ruling of the court is published, is announced based on the resolution, but the resolution is going to be and void or not. So based on that, the tax office also dismissed the proceedings. So I can fully confirm, firmly confirm that we obtained -- we maintain the status of the tax capital group, and we'll be able to take advantage of that in the subsequent month and because the group status is valid until the end of the year, and we'll be able to take advantage of the full effects of the status. Moving on to the earnings, Piotr already mentioned a number of things that had an impact upon those earnings. We are dealing with a major decline of revenue. The price declines were behind it and the decline of volume of electricity sold. However, this didn't have an impact -- negative impact upon the results we generated. We have historically the highest EBITDA in our group. We never reached close to PLN 6.5 million of EBITDA. That's what we like to brag about. We want to show also that the market consensus that took place at the end of the year was about PLN 700 million lower. So that means that the market estimated that our earnings will not be as good as they are. Regarding the -- and of course, about EBITDA, I will expand more about it presenting the individual segments. However, regarding the net profit, it's much lower year-over-year. However, as we report looking at, doing in our regulatory filings, we booked an important -- a major impairment charge, especially in the Generation segment on the conventional assets, also in the heat line of business that's way more than PLN 1.5 billion of impairment charges that we booked during this year. So it had an impact upon the net profit. In addition, the perspective Piotr mentioned, so the deterioration of results in the earning and the falling CDS determine the ability to restore the tax assets. So, assets due to the deferred tax obligation was also adjusted. So it also had a negative impact upon the net result. Regarding things that we want to brag about is a significant increase of the capital expenditures. Definitely Michal will speak more about that. What we'd like to emphasize, we announced the strategy on December 17. We said that the 90% of the CapEx will be allocated to the distribution and renewables lines of business, and that's what happened. Already this year, but it's already finished. This year-over-year increase about 20% up. This is also important. We are not radically increasing the CapEx, not to spoil the contractors market. We are trying to encourage new contractors to submit bids to us, and we are gradually increasing the CapEx level. Regarding the net debt-to-EBITDA ratio, it's at the level which is quite low, historically, one of the lowest that we reported over the last few years. This was impacted, first of all, by the improvement, of course, very good EBITDA. That's the main factor behind it. The CapEx here, the difference between CapEx is such that the CapEx year-over-year was flat and very good results on the working capital balance, a major decline of liabilities related to the compensation system related to the decline of electricity sales prices, curtailment of inventory level. So it went down to PLN 2 billion regarding working capital balance. Regarding the operational data, Piotr already mentioned some of them regarding the distribution itself, we have here 1% -- close to 1% up year-over-year, 31.7 terawatt hours of electricity distributed. That's practically right on the money regarding the increase of electricity consumption national, which was about 0.8%. Regarding renewables, Piotr mentioned it, the increase of production in renewables, first of all, was due to the newly commissioned capacities. However, the production from the hydrogen plants were much lower, weak hydrological conditions and then the floods led to major reductions there. Also to a certain extent, small extent, this reallocation was contributed to the fact that we up to now capacities produced less year-over-year. Regarding the decline in the conventional line of business, similar as nationwide, we are dealing with a 10% decline in the hard coal business. The same situation applies to our units. The price is getting weaker and weaker and the growing output from the renewables and gas-fired units are pushing out the most expensive units in the meritor. This partly applies to our -- some of our 200-megawatt units. The heat line of business reported similar output year-over-year, slightly higher temperature during the heating season meant that this production is a bit lower, but it's -- there's not much difference between year-to-year. And the last parameter, the matter of reduced supply, Piotr mentioned that we had departures of 2 major customers in Group A, the customer from the competitive group 1 can say, I can say the distribution customer from another utility in 2023, 2024, they were making purchases from electricity from group '24, we didn't continue those purchases. In addition, a bit weaker consumption, especially in the steel making industry, coal mining industry and the automotive sector. They all -- especially in the south of Poland, where this industry is located, that had a particular impact upon the reduction of consumption in the business segment. If we move on now to the comparable EBITDA, both comparable EBITDA versus '23 and '24, it is better versus reported EBITDA, which is, of course, a positive signal regarding the factors that determined and adjusted this reported EBITDA. So in the 2024 year, first of all, this was the issue of a change of a tariff. I remember starting from July 1, the tariff was changed from the EBITDA point of view, it took away about PLN 550 million. At the same time, had a positive impact of tax interpretation that is related to the famous regulation that reduced prices by PLN 125. We had got a positive interpretation that VAT can be included in that price. That improved the result by more than PLN 100 million. The final factor is the issue, as a matter of fact, of the deconsolidation of joint subsidiary, TAMEH Holding controlled TAMEH Czech subsidiary, they declared insolvency because in the previous year, we set up a provision. So through deconsolidation, we restored some of those provisions. We added the result of TAMEH Polska result itself. So it led to the one-off improvement of EBITDA by more than PLN 260 million in 2023. Just for your information purposes because during the previous conferences, the key aspects were setting up a provision for PLN 125 million and the payments to the price difference fund that caused the deviation of result by PLN 150 million. I'd like to note on this slide, what I mentioned already, we are not showing the balance of the impact of revaluation model of balancing difference because we eliminated that retroactively and we have opinion that the results in the distribution line of segment -- line of business are comparable year-over-year here. And now again, we can say that our key line of business, we always emphasize that for majority of you, it's a very well-known fact, but sometimes we are getting a question about the core. We are a distribution group. The most important part of EBITDA comes from the distribution segment, more than 60% generated by this line of business. Let us see the nominal increase year-over-year is close to PLN 1 billion. Historically, it's the biggest increase in this segment in history. The other segments are contributing a few percentage more up to 12% top of EBITDA. So the distribution line of business, EBITDA is the main factor determining the entire EBITDA. Regarding the negative EBIT in the Generation segment, I already touched upon this topic when discussing the net profit. First of all, the impairment charge related to the coal assets plus the not full ability to take -- to use the deferred tax asset. And now let's move on to the individual segments. Based on this bridge graph, we can see that we only had a single segment had a negative impact upon EBITDA year-over-year, but all the other segments had a very positive impact upon the EBITDA. First of all, the already mentioned distribution, PLN 1 billion year-over-year. The most important factor that had behind it was the increase of regulatory asset base. And the second factor is the increase of weighted average cost of capital by 2 percentage points. That had an important impact upon the earnings of the distribution segment. In addition, we had a positive change on the balance of regulatory account. That's true but was still negative, but nevertheless, this change was for PLN 200-plus million to PLN 80-plus million. So let us remember, we account for the difference in the volumes that were actually performed versus the ones that we had included in the tariff. Regarding the second segment, it's not so intuitive. So the result in this segment are not so intuitive because the main determining factor of the positive result, about PLN 250 million increase in the Renewables segment is a price change. One can say that the price is dropped on the market, but we're talking about the increase of EBITDA. However, here, one have to remember that in 2023, we are dealing with price caps, statutory price caps. Therefore, the price of electricity from renewables was capped at a certain level, which was much lower than the market price. And despite the fact that we had a deal -- we dealt with a decline of market price year-over-year, but it was still much higher than the one that stems from the price caps. That's why the positive result. We also had a positive impact coming from the volumes produced by the newly commissioned wind farms and photovoltaic farms to some degree, a negative impact -- negative factor on this segment was the decline of prices on the -- of green certificates. In addition, let us remember that year-over-year, our power plant, some of our wind farms covered by the support mechanism are reaching the 15-year expiration of this system. So year-over-year here, the trend will be downward. Regarding the Heat segment, here, we are dealing with 3 factors. One I already mentioned, the deconsolidation of TAMEH Czech subsidiary had a one-off positive -- very positive impact upon the results of this segment. The negative factors were the results of generation of electricity line of business. As Piotr mentioned, the CDSs on all hard coal-fired units significantly dropped. It also affected the supply segment. So the margins year-over-year are much lower. A positive impact came from the increase of tariff year-over-year, but it didn't offset the decline on the electricity. In the Generation segment, the same situation, we are dealing with a very significant decline of the CDSs, both on the electricity produced and we also had dealing with the declines on the buybacks. The margin on the buybacks year-over-year was also lower. In addition, in the Generation segment, we had a one-off event [indiscernible] nonrecurring, it was damages coming from Rafako and the insurance companies, partly stemming from the final settlement of a contract for the Jaworzno 910 megawatt unit construction. Regarding the Supply segment, it was strongly determined by the one-off events. And here, we're talking 2023 about setting up a provision for PLN 125 of reduction of prices for the customers, so the invoices of customers by PLN 125. In 2024, we're dealing in turn with a reduction of tariff starting from July 1 and a positive preparation of a tax office. This were very strong determinant of results over the last 2 years. If we're now moving on to the debt slide, Grzegorz already mentioned that we are listening to you. So we changed the presentation form. We are now showing the full debt, economic gross debt and then a bridge how we are arriving at the net debt, which we are reporting to the banks. So if we look at 2024, we are reporting for the banks, the PLN 11 billion -- PLN 123 million. But to show the full picture, so what you asked for, we also showed the economic debt that takes into account also CO2 costs, which theoretically are allocated to 2024. So we are saying that the electricity has already been produced. So therefore, we need to retire a certain number of CO2 emission allowances. However, we are buying those carbon credits under the forward formula and we are paying most often since the retirement obligation comes in September. We are paying for them in August. This deferred impact of payment for CO2 in 2024 is about PLN 3.2 billion. And then we strip it out and then we arrive at the financial debt, we can be -- everything can be read from the financial statement, but strictly from the financial statement, looking at the financial debt, we are dealing with 3 items and 2 items that are worth commenting and which are stripped out of this debt -- the gross debt or the debt that we are publishing in the financial statements. This is the effect of the leases and the effect of the sub-ordinated bonds. A few words of explaining what are the leases. In our case, these are mainly the rights for use of fruit of land, also the easements and the leases of land. So if we are, for instance, building new wind farms and we are leasing land or plots for them, automatically increases the amount, the value of leases. Similar in distribution, if we're entering new land, new plots, we are doing the easement for transmission. Automatically, it increases the value of leases. According to the contract agreements with the bank, these things are excluded. We are not reporting them as an increase of debt. The second portion is the subordinated bonds. Let us see that we have a downward trend year-over-year. This increment also not included due to its characteristics that this repayment date is after all the senior creditors. So via the last one before the shareholders, they are paid back. But this increment, we were using very strong when we had a high net debt-to-EBITDA ratio level. Since we -- this ratio declined, we are reducing the subordinated bonds gradually. We can see PLN 800 million drop year-over-year. Another tranche will repay at the end of this year and another one in then subsequent years. So the trend is downward and here, let us confirm that this item over the next 2 years, you probably will not see any more. Regarding the available financing, here, let me confirm the group has a very conservative approach regarding the securities. So we are securing the loan needs at least 12 months ahead of time. As of today, so December 31st, had secured more than PLN 6 billion for CapEx. Regarding the maturity of debt, it's highly very much balanced over the years, not more than EUR 3 billion in any single year. So confirms that the group can easily handle it and refinance it on the market. That's practical regarding the financial part. I'll probably get back when we show the last slide. In the meantime, let me hand over the floor to Michal, who will talk about the CapEx project.

Ladies and gentlemen, as it was mentioned by Krzysztof, by 17% went up the CapEx -- total CapEx. 2024 was the year when we are trying to optimize the CapEx in the conventional line of business, namely defer, optimize the overhaul scope, which was possible within the given year, but also accelerate investment projects, especially in the distribution line of business, where definitely we exceeded the plan that we found as part of investment was possible to complement by the end of the year. But also in the renewables segment, when we acquired and started the implementing of a wind farm product will be the second largest wind farm in Poland. And moving more into more details in the distribution line of business, our biggest component was the construction of installation of a new grid connection. Similar as in previous year, we implemented 42,000 agreement -- connection agreements, mainly for individual consumers, but also increased the capacity installed with micro installations and the larger renewables installation on our territory in the case of our territory due to the geography, this is mainly photovoltaic farm. Now at the end of the year we had 3.9 gigawatts in micro installations on our area of operation, more than 3.5 gigawatts in larger renewable installations that we had installed on our -- in our area of operation. Another largest CapEx area was the replacement of grid assets. Here, we modernized more than 950,000 of medium to -- high to medium voltage substations, but this modernization was comprehensive. We are also increasing the cabling level of our grid, which is about level of 40% roughly, and it's gradually growing. The third large area of investment and distribution with the smart meters, but we spent PLN 247 million. We reached the share of customers equipped with smart meters in the region of 26% [ at the end ], which was about 1.6 million meters, and we are planning to install almost 1 million or further meters in 2025. In the renewables line of business, here, we continued the construction of wind farms and PV farms. Among others, we commissioned 3 wind farms and a PV farm with a total capacity of 176 megawatts. The details of individual projects, I will expand on in the subsequent slides, but we are also continuing the program of modernizing the hydroelectric power plants, taking into account the discussion regarding the participation of [indiscernible] Polski company and [indiscernible] the modernization of the power that is not strictly utility-related part. But also the number of products will be visible in the subsequent periods. Among others, the energy storage facilities, as Grzegorz mentioned, 280 megawatts received the capacity market support. We had a larger pilot will be now submitted into the -- for the support donation system, but also the pump storage power plant product in Roznow, but we are coming to the end of a basic engineering plan, which will define exactly the size of the pond and the network of geological tests, and we are preparing projects according to our in-house development. As we mentioned, we had the PV projects that are ready for implementation. We are waiting for the preferential financing and also initiated 6 wind projects that will be ready in the subsequent years and we will strengthen the CapEx portfolio. In the conventional generation, as I mentioned, mainly the minimizing of spending. Our overhaul policy is based on the fact that regarding the 200-megawatt units, we are focusing on the legal requirements, the requirements that are stemming from the technical supervision office requirements and optimize the entire remaining CapEx regarding 2 units, 10 units and [ the 910 ], we are trying to maintain the higher availability rate because these are the units that are earning money that they are producing much more via part of the electricity market. So the availability rate is important from the point of view of the economics of operations. We managed to reduce those spending in 2024. But in 2025, we are entering the major overhauls on the unit #10 in Lagisza. In 2026, we have to implement a major modernization of the 910-megawatt units. So in subsequent years, that CapEx will not be so low as it was in 2024. However, systematically will be decreasing over time. Regarding the heat line of business, we invested PLN 126 million as of today. These are mainly maintenance of the generation units. However, at the stage of preparation, we have in total 13 CapEx projects that are part of a decarbonization plan regarding the heat line of business. And the goal is to achieve our strategic objective. First of all, the completion of the production for the needs of district heating from the coal-fired units by the end of 2030. We have a number of projects at an earlier stage of development that still are not yet visible in the CapEx directly, but we at the preparation stage. Systematically, we are investing also in the expansion of the heat market and increasing the ability to supply our district heating network from our own sources. This year, among others, we commissioned network investment in the large pumping station, which will enable -- will make it possible to increase by more than 30 megawatts the load of thermal energy load of the Katowice plant, which help us improve the economics of our generation part in the heat line of business. And the remaining investment projects, the biggest part are the investments in IT, in the customer service and the steadfast implementation or expansion of lighting systems for the municipalities. Moving on to the next slide regarding our renewables project; what's of key importance is the fact that we managed to complete a number of projects, and we completed those projects within budget and on time, which demonstrates our ability to implement the renewables project in cooperation with contractors. It wasn't always easy. We were dealing with a bankruptcy of one of the contractor on one of the farms, a number of technical difficulty to solve along the way, but we managed to do it within the original schedule. The Miejska wind farm was commissioned in August '24, a farm of the highest towers in our group, 143 meters, larger turbines that we had so far, 3.9 megawatt turbines based on Nordex 131. So also newer technology, newer generation versus what was commissioned before. The Warblewo wind farm, Gamow wind farm, which are the farms that were commissioned in October and December last year, they added 63 megawatts to our portfolio. We are in the process of implementing 3 further wind farms. The Nowa Brzeznica wind farm. Here, we completed the construction of the GPO grid connection point. We are in the process of installing the turbines regarding [indiscernible]. We are in the process of implementing the -- constructing the foundations. We are finalizing the pouring of the contract for the full set of those foundations. This farm we're also counting on a lot because this is a farm that should have the highest productivity in our portfolio. But we are hoping to have it commissioned by the end of the year. Miejska Gorka wind farm acquired last year. Here, we are at the stage of building the foundations, erecting foundations. We are hoping to get to the midpoint of those foundation directions, but the wind farm will be commissioned in 2027. And once it's been commissioned, it will be the second largest wind farm in Poland. Regarding the PV, here in December, we commissioned the PV farm Proszowek. The PV farm Balkow is an interesting farm because it comes from the development -- in-house development. We are in the process of assembling the structure and the modules on this farm, plant commissioning at the end of 2025. And finally, the PV Postomino, this is the cable pooling project, the first cable pooling in the TAURON Group, large-scale 90 hectare farm will be one of the largest in Poland in Poland has been commissioned in cable pooling with wind farm Marszewo. The modules have been delivered. We are in the process of installing them. We are planning to commission the farm already this year. In total, we have [ 55 megawatts ] commissioned in total online. That's the status as of today. Thank you.

Okay. The perspectives for the forthcoming year. How do we see our business? As for the individual segments; in distribution, we see an increase -- increase of tariff by more than 3% determined by the regulated asset base by PLN 23.6 billion and increased weight assets cost of capital by 10.84%. We also similarly as previous year, will have the positive effect of the regulating account, and this will have a positive effect on our segment. As for generation, we have similarly as to last year, a decrease. The margins are being more tight. So production, even it's at the same level, the margins are lower. The market is very stable and the repurchase margins are lower year-by-year. Results are improved by the inflationary indexation of the power market, which has a positive effect and the balancing power, which also has a positive effect. But both these factors are insufficient to set financially an increase of this segment results year-by-year. As for the heat, margins will also decrease. It is positive that we have better results due to tariff increase in the transmission and generation. As for the reported EBITDA will be lower because we will not have the one-off effect of deconsolidating the Czech company if we -- but it should be better if we take out the one-off effect. As for the rest, we have a significant increase in assets and generation from those assets will increase the overall volume of production, which will have a good effect on the results. We also have a decrease of prices in the market. Some of the assets are being hedged, but some of them operate on spot markets and spot prices are increases, then this will have a negative result on the segment. And as I already stated, the selling price of certificates will also determine -- will have an adverse effect on this effect. And successive wind farms will fail to maintain the certificates because of their age exceeding 15 years. As for the sales segment, we count on increase of results year by year. We cover all tariff costs. We have 18 months tariff. The tariff will cover the justified costs. Also, we count on that the -- in the result of the pandemia, we had the freezing I think the [ OZE ] and the SME and that also deteriorated the results this year. This freezing of prices will not take place. So the results should be better year-on-year. The volume should be quite stable. Taking all this together, we assume that the overall consolidated EBITDA for the group will be certainly not less than the good EBITDA of this year. That is our assumption. Of course, the Management Board will be determined to get a better EBITDA, but we can promise you that it will not be lower than EBITDA year-on-year. As for CapEx, as I already mentioned, when discussing this year's -- last year's results, we are reckoning a progressive increase in CapEx stocks reaching PLN 100 billion until 2035. We don't want to make it in leaps. We will assume an increase of 20% year-by-year. But of course, we have to have the reservation because we have to have the possibility of access and availability of res projects. The majority of funds spent for these investments will be in the distribution. And this is, by way, no surprise, 60% of all CapEx will go to this area. And we can say that 60% will be also next year. Will it be exactly 60% less or more than 60%? It will be depend on the profitability of the res projects. We expect that the net debt as compared with the very low index for this year will be slightly higher. This is all for the 2025 outlook. I think we can dwell on details during the questions and answer.

We are going now into the question-and-answer section. First of all, we will answer questions from the room, and then we will take questions from the Internet. You continuously have the possibility of sending us questions through the chat available on the transmission web page. So let's start.

Can you hear me? Pawel Puchalski from Santander. I have a question relating to the distribution segment. We have seen in this strategy, PLN 60 billion CapEx. I want to know what does the company assume what [ RAP ] increase that's one-half of the equation. The question is how the regulator will increase the depreciation. You assumed the WACC 10.8% for this year, but I compare that with KGE 12 and 8. So I want to know why the cost of capital for TAURON is different than it is for the other groups. And the second issue, can an analyst or can investors count on the fact that the bonus for reinvestment remains for the successive years on a stable, say, 3% level? Is it a sure or is it just wishful thinking? That's my question.

I'd try to respond to those questions. And partly in the strategy, we have a response to the first question the expected RAP at the end of 2025 should be more than PLN 50 billion. So relative as to what we expect for this year, PLN 23.6 billion, we can say about PLN 27 billion, PLN 28 billion difference in the strategic perspective. As for the bonus for reinvestment, the question was already answered. Why there is a difference between ourselves and PGE? That's -- first of all, this is the bonus for reinvesting and for some part, decision of the regulator and the difference in the regulatory account, and that surely has some effect, and we have to look at the results in the distribution segment, not through the WACC only. If we focus on the WACC only, then you have to remember that PGE had generated funds from shares issued some time ago. TAURON did not issue any shares. And one of the main elements there was to assign those funds for distribution. So they have increased strongly historical outlays as compared to those which we had. And hence, we have the difference between the WACC level. It really outlies -- results from the historical increase in the outlays. In our strategy, we want to significantly increase the level of investments that will increase our argumentations with the Europe President. Can we say that the President of Euro will guarantee 3 percentage points bonus for investments? Well, it's not clear that it will be 3:1. It results from how much funds do we spend. From the model, it doesn't emerge clearly. The President has said that it will be at least 1 percentage point as compared to [indiscernible] bonus for reinvestment for until 2020. That has been stated. Of course, we also want to insist to have a document or a new document, which will tell us how will the WACC possibly change? And how will the bonus for investments be relative to the reinvestments and whether it will be constant. For this time being, we don't have any documents, and I'm unable to confirm that we have the 3% guaranteed above the minimum WACC 7.5%.

[indiscernible], please comment as to the law that was yesterday was adopted by the Council of Ministers. Their justification was that you are purchasing for this year month-by-month, we can understand that. Is it really that way? And do you consider that you have to work that way this way, this year by changing the tariff? And the second question refers to the decrease in tariff, what has -- what the President had discussed. Does it relate to sales only or distribution? Can you state the volume decrease for the large industrial recipients of energy?

I'll start with the first part about the tariff. There is information is very okay for us that until the 31st of July, there will be a new tariff submitted from the point of view of the client, which is, of course, most important, until the 30th of September, that is until Q3, we have the freezing of prices. So each client will have PLN 500 per megawatt hour. That's the first message. The second message is that the tariff application would be submitted by the 31st July with effective 1st of October in Q4. It's okay for us because we see a perspective of a decrease in prices. So if we submit today a tariff for Q4, we see a chance for the tariff being lower than it has been approved for today.

You didn't purchase the energy for Q4 as yet.

It's a more complex issue. I don't want to talk about the hedging strategy because that is an element of competitive advantage. Seeing that there is a decrease in prices, there is a number of other business elements. And from this perspective, there is a chance that submitting the tariff application for Q4, the price will be lower.

Did you foresee such a movement of the government in your strategy?

It doesn't have anything to do with the governmental strategy. That was the same last year. We know that in midyear, we had submitted tariff applications. If we look at the hedging mechanism, this is something that emerges from our strategy of managing security or risk management, and we hedging this in central. I don't want to say whether each month, twice a month in the same tranches, each company does it its own way. Looking at the mechanism that we're talking about today, not talking about the tariff that we have for 18 months, so until this year -- end of this year, if you look at this, how the guarantees have decreased by 10 years, am I right here? Yes. We have this -- we have the decrease in price. There is a potential that we submit a tariff application for Q4, we could show a decreasing tendency. The intention is important. If you look at the prices, I'm not talking about the freezing of prices. I'm not talking about the customers, but how are the prices approved by the office. The prices 3 years ago reached PLN 1,200, PLN 1,400, then they decreased to PLN 723 and to PLN 623 at these levels. And looking from that perspective, this is taking place with the fall in prices on the wholesale markets. It is possible to get a further decrease of the traffic price of this year -- it's a different matter how the client looks at it because the client maybe he had PLN 400 and PLN 500. What will happen in Q4, it's not our decision. It's a decision of the government to take. But looking at the perspective of freezing prices and the question of market prices, these things are converging together. And this is because we have more and more reset in the system. It's important that irrespectively, of the tariff applications we're talking about, we are very determined to have the prices in the energy market very low, but retaining our margin because we are a commercial company. But looking at what we're doing today and that our expertise from the clients with dynamic tariffs, we're doing the offer of semi-dynamic tariffs to give an opportunity to the clients who want to get involved to get their prices decreased. By using energy in specific hours in a specific way, we are able to optimize its use. But it requires optimization, but this is true for every aspect of life for health, your appearance, et cetera. The type and distribution is decreased by 1% as compared with 2023. I will repeat again. We have different portfolio of customers than 2023 in the distribution segment. We have several customers with high consumption, 2 tera kilowatt hours, and we've lost them. That's one component of the bridge. And the second is lower demand for energy by the steel industry and mining industry because we're not exposed in the automotive industry, we will not see that -- we could see that in 2024, the automotive segment will be decreasing up to 2026.

Okay. It's okay now. Two questions. First, I'd like to ask about the Monday meeting with the Prime Minister. What was it about? What did you hear? And what do you intend to implement of what the Prime Minister had recommended to you as the representative of the majority shareholder. That is the state treasury. And the second question, the generation structure. I'd like to ask what is the generation structure? How do you earn on repurchase of energy on the balancing market? What are the perspectives for 2024 for the market for repurchase of energy and from the rebalancing market purchases?

I am to talk about -- I'll answer the second question first. The structure in '24 is as follows: 60% of the result we made using the new principles of the banking market and 40% for the existing pockets, the spot and term market. As for repurchase, I do not have that information at this moment to say what is the part of repurchase in the trading part. Such repurchase is being done, but I don't know -- but if we sold 10 terawatt hours, then 8 terawatt were made. So about 2 terawatt hours were repurchased. That's the volumes. This year, since last year, we had a start-up for that lasted 6 months. We assume that the generation from the balancing powers will be much higher. I don't think twice higher because the situation is changing dynamically, but we will be very interested in giving the balancing powers, the initial secondary and regeneration. Last year, in the initial period in June and July, the new Jaworzno was standing still. We count that this Jaworzno plant will be dedicated to such activity as it was planned.

I was at that meeting. I don't feel competent to communicate what was given at the close meeting from -- you've read yourself the information that was officially distributed by the office of the Prime Minister yesterday and today. The meeting was very good. The perspective of the state treasury as our shareholder, we have 33% of the state -- about 30% of the state treasury in our company as a shareholder. The perspective of the state treasury is as follows: we have to do our business. That's a natural thing to do. But the state treasury looks at our companies as elements which provide a pendulum for developing the economy, national and regional companies and giving the country competitive advantage. The trend in the world and Europe is, of course, that we respect globalization. We love competition, but we have to take care of our regions about Europe and also Poland, Poland, Silesia, upper, lower Silesia because this is our green domain. Our work as managers is to balance out the competition on the one side, the competition between different markets and technologies. We have to affect the local impact. We have to impact locally because every one of us wants our regions to develop, the economy to develop regionally because that's good for our results and also for future generations that will live there. And we also have to balance out the profits that we are generating. We can see how strongly we are demanding the results, but we also have to take care of the prices to ensure development. We have to make everyone aware and we have to show the perspective of the state treasury to see how largely have companies like ours to ensure develop and compete with Asia, Africa, with Spain, with Czechia, with the United States and other areas. We already today see when we negotiate with those companies, which want to install data centers. The discussion is as follows: give us the grid, give us elected energy, green energy, cheap energy, low taxes, variety of subsidies because that we can put those data centers in our areas. We are today competing with PGN and Asia for locations, but together with Hungary, Czech and Slovakia and the other countries, which are fighting for those investment projects. For me, it was an excellent meeting, seeing the perspective of our major shareholder holding 30% of shares. What is very important for me that looking at today, after this discussion, we are showing your strategy. We're talking about the value of our shares. We want to maintain our dividend strategy. We're communicating further investment projects. That is with me very convergent with long-term creation of value. And I hope I've answered this question.

Thank you. Do we have any further questions from the room? One more.

[indiscernible]. A short question. Looking at your competition, we can say that in their eyes, there is more attractiveness for gas-based investments. How does that look for -- from your perspective? Do you want to be more active in the gas generation segment?

As we've already segmented and communicated that one of the options that we are preparing for our assets is to build peak power gas units. Initially, there were no such options available in the company before, but we consider a different technology being more promising that is units which will not have such high efficiency, but will be more flexible and will have lower unit CapEx and high availability. So either will be open cycle turbines or gas engine turbine batteries. Our assumption here is that such units could be built between 25% or 40% lower CapEx. So assuming that energy mix will be present with RES increasing and effective use of conventional blocks will decrease. We will have to have much lower cost and higher flexibility. So less efficiency, but lower unit cost. These are just investment options being prepared. We have submitted applications for issuing connection conditions to the grid. We have further projects in the pipeline, and they will depend on the rate of conversion. We could be increasing the rate to 2 gigawatts, 2.5 gigawatts in our portfolio. Today, it is very difficult to say about the economics of the entire process. It will all depend on the future structure of the new power market that will be implemented after 2030. We assume that those units will be more competitive as to CCGT as for support. And therefore, we assume that the power market should be the main source of generating revenue. If the power market will not be effective, we will not undertake such a project. So this is just an investment option, which is assume -- assure what we need in the system, 10%, 20%, maybe 10% power effectiveness and will be cheap and much effective. It all depends on the demand for the service. We're approaching the topic from a commercial viewpoint. If there will be demand for energy security, safety available from 200 megawatts, then we will be able to maintain those units. With respect for our promises, we will then perform overhaul and sell those services. If there will be peak power demand for gas-fired units, then we will invest in those units. If there will be other options, then we will be able to rapidly react to that and invest where we get the most value. We have not assumed that we have to build so and so many gas systems because that will require a fixed document. We're not doing that. We're looking what would be the demand. And this will have to be transformed into support systems or energy centers; in case of a peak system, there has to be a dedicated support system for such units. And that's how we will approach this unit. It may happen that in 6 months, we will meet or maybe in 3 months and there will be some demand from PSE or from the legislator because say they need long-term energy warehouses, then we will approach that project commercially. When we do it, we want to be at the front or first. We want to be trendsetters or the first person who assumes the risks, of course, once it's reasonable and had to be at the upfront of this investment possibility. That's how we approach those projects. Nothing by force. In auctions, the power law gap is also in gas. We have to be reasonable in our approach to gas. We have to take into consideration and the lead time required to supply such units. You have to be very, very cautious if you undertake such a large project. It's quite different for the projects that we've been implementing today because they were being prepared several years before, and they are now being -- they are just being finished off. But no one ever has asked a question about separation of the coal assets. 90% of the questions last year was about separating of coal assets. I don't want to provoke you, but there were no questions asked about this subject matter at all. Thank you.

Any other questions from the room? No. Let's now go into the chat ask questions. The first question, instead of buying onshore farm for 12x EBITDA, is it better to buy an EBITDA contract below PLN 350 per megawatt hour and then secure delivery of energy to clients?

Yes, of course, that's better. It's even better to buy for PLN 300, PLN 520 or PLN 300. Of course, it's better. We're talking about it. We can stay after this meeting. And if any investor wishes to buy -- sell his assets for PLN 320 or PLN 300, yes, we're buying it. We're negotiating with many suppliers. We're asking everyone to come and discuss with us if you want to sell at such a low price. Well, as for the investment and then I would give the floor to Piotr on PPA. In our strategy, it's a mix of activities. You want to be an owner of some of the assets and some of the energy we are obtaining from the PPA. Looking at our group, the volume of energy that we sell and generate -- and even in 100% green energy, 100% will be from our assets. Is it worthwhile to buy a purchase at 5x EBITDA? I don't know that might be from movements of the competitors that such a price from our perspective will be very high. We always have to assess the profitability of the assets. It is not our intention to overpay for the wind assets. This market is very difficult. There is little supply of project. There's high competition for what's left on the table. We assume that the supply will grow over time particularly in the years 2027 to 2029 there will be more projects available. We cannot hide from you that the market is very difficult. And if we go for PPA, PLN 550 for the megawatt hour, that will be a great offering.

I think you've already answered the questions in our strategy. We have already stated that even if we assume optimistically that our projects will develop in 2025, we will still have the 46% energy from outside our assets to become green in the -- at the rate we plan to do. If there is a situation whereby the return will be better on project for repurchase of energy from a wind farm and that would be a better solution than building or acquisition, then that would be the better for us. Of course, PPA is not a PPA as such. It's just a contract, a contract for bad times. It has a number of clauses of which we are fully aware, which are associated with securing risk because if we sign an initial phase contract, the farm may not be built at all or may not supply as much energy as we need so not everything is gold what glitters.

Okay. Next question. After discussion with Mr. Prime Minister, do you see a risk of preferring of national investors in building assets or distribution assets, which will lead to increase in distribution costs?

I see no risks after discussions with the Prime Minister. That's the first conclusion. The matter of communication and the scope presented was quite explicit. I do not have to repeat that. It's quite different. We, as a company, referring to what is here in our DNA, in our strategy, we are locally for local impact. We, as a company, want to affect and we have a concrete effect on increasing the region. Scale of the country, we trade with energy, we compete everywhere in Poland, and we can build a farm wherever there is wind. But also, there's the issue of distribution and heat. These are local businesses, and there is an enormous effect of local businesses. And we support ourselves with local businesses. We work very hard to widen the number of suppliers. There are details available how we do that. For us, it's important to build a competitive market. When I came to the Management Board, we have seen that the supply for services was much lower than the demand we had. For a long period of time, we have worked on getting confidence of local businesses, which, of course, have to invest into devices, into people just to provide services to us. For a long period of time, we're unable to find a service in a [ cracker ] because of the cost cutting costs or payment deadlines, those people lost confidence for the large energy compasses and went to different businesses. And we had to work more than a year to present our strategy guarantees and on presentations to make those people come back to us and again, go back into investing into devices and competencies. In the majority of cases, we are able to make that mature. But it's a question of just one year. When I talked to you during the conference, it's very easy to lose confidence as a sector, but building such a confidence takes years. So we have a long period of time to encourage investors and local businesses and suppliers to employ people to invest into devices and machines and also expand their businesses because we are a reliable partner, and we have a concrete plan for many years ahead. Of course, we will be hit by a situation where we have a local supplier, and we'll have a supplier from Asia, which is much cheaper. But this is a topic that does not apply to our company, but that applies to the entire European Union or the entire country. This is something that should be addressed how to build competitive advantage of the European Union, how to balance these 2 issues. First of all, we have to cut costs. And secondly, we have to build value for the entire economy. We have to be here very intelligent. We have to be very, very, very keen to get abreast of this. And there is not a single outright yes/no problem. These are things that have to be very smartly agreed. The pressure of prices and competition is present everywhere. So this is also healthy challenge for local manufacturers and distributors. No one of us wanted to go back the monopoly because since I'm from here, you have to pay me. This applies both to our company for competition on the energy market does a lot for us. This deals with the distribution. Competition is a very healthy motivating tool for the company, for managers and everyone. And Michal will tell you about the examples here.

We are trying to expand over time the base of our suppliers, among others, organizing the first for a number of years in the heat supplier base. This year also, we accelerate regarding the distribution line of business in the context of the openness to the direct talks with contractors and encourage them to join the base of our suppliers. This year, we had the first time such extensive consultation regarding the expansion of the distribution grids, the target of which was, first of all, to meet the needs of local government units, but also to transparently show what we are planning to our suppliers. We also made a number of revisions of contracts that were quite tight -- lopsided so as to increase the number of suppliers that are able to accept the risk of working with us. And we are going towards the disaggregation in the case of large investment projects, especially in the heat line of business, but also in the context of the potential generation capacities, we want to apply the so-called investors suppliers to separately purchase core technology for the gas engines for the heating heat line of business investment, we are facing a situation where the 5 general contractors are bidding the same exactly technological solutions. As a matter of fact, based on the same engine, however, they are adding on various margins, construction costs and various risks. So we want to separate the supply of the core technology from the supply of construction services and structure such contracts in such a way so as all the largest number of contractors to take part in the construction part and effectively manage the allocation of risk. So our direction is to reduce the barrier of entry for suppliers to become a more attractive partner, but that's the only thing that we'll make sure that we can effectively implement investment projects with at a sensible level of CapEx.

Okay. So another question. Is it possible to treat the acquisitions of renewables farms as an acquisition of an asset and then transferring passing on for the electricity recipient consumer pass on plus and it's in contrast to the merit order system that sets the electricity prices.

Let me just say one word. It's not passing on the cost-plus formula because in today's competition world for competition world I pass on cost on you is a weak element when the customers have so much choice. It doesn't have a good end strategy. We are looking at the following way. When we increase the share of renewables in the system, the production cost, variable cost will be getting lower and lower. That's what we're observing. But what is a challenge? The challenge is when the cost of balancing our profile should be as low as possible. And those companies that will be able to bring about the following situation, but in the cheapest way, they'll be able to combine the cost of production with the customer profile will be the winners. That's why our investments in energy storage facilities in the development or expansion of dynamic tariffs. What I'm talking about is that the fact that we are combining the production profile with the customer demand is the wind profile. So our strategy is the onshore wind farm because this is closest. Of course, we supplement with PVs, and we have to build the ecosystem of those distributed energy storage facilities and heat allocation so that the cost of profiling is as low as possible. That's what we're talking about, not passing on one-to-one the cost, but we are building about how to build a long-term competitive advantage while maintaining the margin, give the customers an opportunity to pay as little as possible for electricity, but they'll pay those electricity prices if it's in line with nature and so on. There will be ours when it's expensive, there will be ours and will be very cheap. The weighted average cost of the bill should be lower. And that's the most important thing. This is the direction we are taking. So we are not transferring on to the customers one-to-one passing on the cost, but this is our strategic intent that we are calling it accumulating the prices to bring about reducing the prices. So we are combining those 2 things together. And all the other efforts where we are investing what level of capacity, what energy mix is to make these 2 things combine, merge each other in the cheapest possible way. You would like to add something? That makes life easier.

What about the bond issue that was planned at the end of 2024? Are you planning to issue bonds this year?

Let me put it this way. We signed a large program, PLN 3 billion worth. We prepared the documentation. And last year, as various other source of financing, we are testing the market, checking what potential terms of financing are available at that time of time, it turned out that the terms of financing in case of bonds are higher than in case of financing from other sources. So we decided not to issue bonds last year. But the program is there in place. We're observing the market. We do not exclude such an option to issue bonds on the market also this year, but it all will depend whether the conditions are favorable or not. As I said, as I showed, we have quite a conservative policy that provides us with freedom to select conditions. So we have PLN 6 billion available financing secured for this year. And now we are looking at the financing in the perspective of another year if the conditions on the market are favorable. So of course, we can consider -- we'll be able to consider such an issue.

Okay. Do you think that in case of substantial decline of volumes in the generation segment, the other revenues, the markets, the electricity trading and capital markets will be sufficient to cover the fixed cost and maintaining the positive EBITDA.

Let me take over the question. Generally speaking, we have to look probably at the 2025 time frame and the subsequent years. If you look at the 2025 time frame, of course, we showed that the earnings of the generation line of business will decline, but we're not afraid that it might lead to under any scenario to the negative EBITDA in this area, the market and the capital market and the sales of contracted electricity should definitely generate a positive EBITDA in this segment. If we look more long-term, so we are communicating to the market to you and to our employees that the key aspect is the capacity market for the 200-megawatt units. So without this market, these units with a declining production volume will not be able to maintain -- cover all of our fixed costs and maintain the operation. So the key thing for the maintaining of the 200-megawatt units in the coming years is to acquire revenue from the capital market. It will all depend upon the capital market auctions. Regarding the 910-megawatt unit issues, it has a guaranteed capital market in 2035. And as we roll in our strategy, we can see definitely the possibility of this unit to be operational and for it to be able to cover its fixed cost both by -- based on the balancing market and the capital markets and the electricity prices on the market because CDS is on those high-efficiency units are possible to be achieved positive CDS, so positive margin. So we would have to get some nuance to this. As I said, 2025, definitely positive EBITDA in the subsequent years, of course, we are assuming a positive EBITDA in this segment because we said if the 200-megawatt units are not able to operate, so we will be gradually phasing them out. As of today, we are preparing themselves for the capacity market. We hope that we can get revenue from this market in the 2028 time frame. Okay. So we promised to you as we had a discussion after individual quarters, you asked us several times, what will happen if the capital market is not there and speaking those units will not be included in the merit order. It's not possible in case of our organization the model that we have in place and our responsibility to maintain the unprofitable or loss-making units. So first of all, we are doing our best to make the units profitable. It's a gigantic effort by the TAURON generation line of business to optimize CapEx to OpEx and all the other aspects. We're continuously working on optimizing the overhauls. However, when it's not longer -- so first of all, the goal is to obtain, to enter the capacity markets to win the capacity market auction and to move -- go through those 3 iteration in 2028. We're looking at the capacity gap at what's happening. It seems to us that that's an opportunity. It can be done. But of course, requires on our side to have a very smart and conducting this refurbishment and overhaul policy and you have to be a good engineer to organize all that. At the same time, we are sending a message that if required, if there is a demand for an extension of this capacity market and this backup from the 200-megawatt units. So at rational pricing, we are able to offer such a service up to 2030. That's a rational amount, and it seems a challenge, but realistic challenge that we can meet. But we can get this information within one year because we have to plan then the modernization refurbishments under a different cycle, different regime we're talking about year-to-year, but -- or maximum 3 years. So theoretically, it's possible to extend it even up to 2035 technically. But it's also -- we need a relatively quick decision and these are outlays in the billions. So this is large money. So if someone were to have such a demand for such a service, large outlays on renewables, on picking plants. So it will be also a major investment in such units. So we are open commercially, that's our approach is commercial, so we respect for the demand side. The customer is our lord, is a king. And at the same time, we are looking at [ Sieradz ], for instance, in case of Sieradz, we have specific actions aimed at converting this to other type of units. So it gives us an opportunity to maintain the status but to conduct commercial operations there. But by the end of June, we will know technically what business case and we'll be able to take decisions what we are doing regarding that.

Okay. So time has come for the last final question, our Q&A session. This year, any major acquisitions in the renewables are planned?

Acquisitions in the nature of [indiscernible], but you cannot really plan in the long term. We're active in this market. We are talking, first of all, about the wind farms at various stages of development. We expanded a bit of our range of searching once we expanded our development capabilities. We are open to acquire projects that at an earlier stage with the readiness for construction. We are talking to a number of entities regarding the existing assets, the fully ready assets or development or portfolio under development. But let's be frank, regarding the size of projects that we -- projects that we acquired last year, 190 megawatts in Poland. There are no such project in Poland, more of such projects in Poland at a similar development stage. So it's highly unlikely we can add the portfolio as such readiness for construction for development at this stage of development, such a number of megawatts as we did last year. However, we'll be working on those projects and depending upon whether we can achieve come to terms, reasonable commercial terms with the seller and when competitive processes, we'll be taking specific acquisition decision. We are active. Supply is limited. Therefore, the probability of buying a large advanced portfolio is lower than higher.

Let me add to what Michael said. We might not feel it yet. You can see it because we are at the transition stage, but this race regarding who will become the leader of new energy has already begun. So we are talking about how we are contracting PPAs, how we are digitizing our operations, how we are converting energy from one source to another, reallocating it towards our production portfolio and the ecosystem of a market that has been built. It's being developed here now. And at the moment, the foundations are being laid down for the future. Therefore, that's our intense approach to this topic. It's not possible to wait because if we outweigh this moment as a company, then we'll never have such an opportunity again to become a leader in the new model of the functioning of the energy sector. That's our ambition.

Thank you very much. So we've answered all of your questions. Thank you very much for the questions. And of course, the press team of TAURON Polska Energia is at your disposal. And I'd like to invite you to have a meeting that will be holding right after presenting the earnings for Q1 2025. And for today, that's all. Thank you very much for your presence, both here as well as online. See you next time.