Ladies and gentlemen, thank you for standing by. The Electrica teleconference is starting now. Thank you.
Hello, I'm Raluca Kasap, Head of Investor Relations, and together with the entire Electrica management team, I'd like to thank you for joining the teleconference call-and-live webcast to present and discuss the 2023 financial results, which were published last week as submitted for the approval of the OGMS that will take place on the 25th of April. Those of you who are connected only by phone, please download the presentation in PDF format available on our website under Results and Presentations section. The participants connected online can address written questions on the live webcast or can intervene live on the Q&A session. Kindly note that since the entire conference is being recorded, all participants will be in a listen-only mode, so the attendees' voices will be disabled. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone.
The recorded presentation will be available on our website starting as late as tomorrow, and the transcript as well in Romanian and English as soon as possible. We kindly ask you to see the disclaimer on slide three of the presentation. Now we'll begin the presentation of the financial results, followed by a questions and answers session at the end. Should you wish, you can ask questions during the teleconference. You can also send them by email at ir@electrica.ro, and we will answer at the end. At this time, I would like to turn the conference over to Mr. Alexandru Chiriță, our CEO. Thank you.
Thank you, Raluca. Good afternoon, ladies and gentlemen. As always, I am happy to welcome you all today. This year, Electrica will celebrate 10 years since the admission to trading on the Bucharest Stock Exchange, and my team and I dedicate this moment to all our stakeholders. 2023 was a complex year that brought, once again, many challenges, and I feel privileged to be backed up by such a reliable and experienced strong team throughout the group. The Electrica group has maintained a positive trend in its financial performance in 2023, with an increase in net profit of over 27% and an 11% higher net profit compared to the previous year, mainly driven by the operational performance in the distribution segment. It's all due to the team, and I thank all my colleagues in the group for their sustained efforts.
In the distribution segment, over 100% of the investment planned to be put into function were done. Regarding the investments, they are also supported by the attraction of non-reimbursable funds. There has already attracted EUR 250 million from the Modernization Fund in 13 projects, approximately 42% of the total financing already signed on the Modernization Fund, and has another 17 projects submitted for approval. All these projects are aimed to maximize the performance of the managed infrastructure and to accelerate the digital transformation of the business. Last year also brought us other important events, such as the acceleration of initiatives in the renewable energy production segment and the launch of the corporate strategy for 2024-2030. At the end of the year, the merger through which Electrica absorbed three of its production subsidiaries was finalized, and in the near future, we plan to merge one more production subsidiary.
We hope to put into function two parks this year of 39 MW and to start the construction for two others of approximately 133 MW. All these projects are crucial to achieving our ambitious target of 1 GW by 2030. As always, we will keep you posted and share more concrete details as soon as we can. In December 2023, the corporate strategy of the Electrica group for the period 2024-2030 was also approved and published, through which investments, diversification of renewable energy sources, diversification of services, digitalization, and large-scale implementation of ESG principles represent the main strategic objectives. By adopting the new strategic direction aligned with those at the national and European level, we will play an important role in the energy transition and contribute to achieving the objectives of sustainability, efficiency, and innovation in the sector.
At the same time, we aim to ensure solid prospects for the development of the companies in the group and meet both the needs of our customers and the expectations of our investors and shareholders. Regarding the distribution of dividends, we choose to be cautious this year as well, as we announced in previous conferences, remaining focused on investments both in the distribution and in the production segments. Another success is the entry of Electrica shares in the FTSE Russell Indices series, which is a confirmation of the improvement of liquidity. The good results and the successful implementation of the investment strategy were felt in the appreciation of Electrica shares up to levels almost doubled since two years ago when I took over the CEO mandate. I now hand over to Ștefan, our CFO, to provide you with a detailed breakdown of our financial results.
Thank you, Alexandru. I would suggest let's go directly to slide 12, I think, where we start the summary of the results. In a nutshell, these results of this year are boosted and are favored by the evolution of energy prices and the fact that the prices of acquisition of energy were contained and were significantly lower. Plus, there is also a strong effect related to the fact that various elements of expenses were kept under control. The only major elements of expenses which were significantly higher were the financing costs because we continue to pre-finance the subsidies from the support scheme and the difference for network losses for the expected and the actual. And also there are some costs related to the increases of personnel costs because aligned with the inflation, we are also adjusting the salaries for our employees.
If you look at this summary, in terms of revenue, there is a slight decrease of the revenues, but under the context that both the quantities supplied and distributed decreased slightly, and there is also a decrease of the average prices. If you look at the EBITDA result, we have a 25% increase in the EBITDA, with a strong fourth quarter. So, the EBITDA margin reaches 18% both yearly and in the fourth quarter. Also, in terms of net result, the result is higher than last year and also with a strong net result in quarter four. The fourth slide, the fourth element relates to the increase of the net debt, which is still reflecting both the fact that we pre-financed the support scheme. We continue to pre-finance the support scheme. We started to recuperate the difference of prices for network losses, the value from 2022.
But still, there is a significant portion of loans which are allocated to this. It's also to be put into consideration also with the efforts that we are starting to do for developing the generation of energy. If we go at the detailed slides, if you look at the consolidated EBITDA and net result evolution, starting from EBITDA of last year, we have a positive effect coming from the increase of the energy margin, which is mostly related to the fact that we have decreased the costs with purchased energy to cover network losses because the overall acquisition prices decreased in the distribution due to the effect of the MACEE mechanism. But the MACEE mechanism also helped in terms of the cost of energy for the supply business.
And then, we also had a factor of increase of revenues in distribution, which related both to the increase of tariffs, related to recuperating the difference of price from network losses from 2022. And also, we had here a positive effect related to the increase of the quantities of reactive energy and higher than initially estimated tariffs for this energy, which also had an important effect. In terms of the other elements, you can see the capitalized network losses. We have a positive effect of RON 971 million. So basically, the amount which was capitalized for this year was very, very little, RON 19 million, because we had a sharp increase on average of 48% of the electricity costs. And due to this effect, the effective price of the acquisition of energy for distribution was very close to the ex-ante price which was given by the regulator.
We have also a negative variation of OpEx of RON 190 million. I was mentioning to you that we kept some costs in control, other categories of cost, but here you see the effect of the financing costs and then of the okay, financing costs. You don't see it here in EBITDA. I will mention later. The increase of the of the personnel cost. And then, we have also an increase of operating expenses in the supply segment, which is related to ITC services. We made some efforts related to the system, to update of the system, and so on. Variation of the profit, compared to last year is profit higher with RON 62 million, which is mainly due to the effect of the EBITDA increase of RON 370 million. And then, this is mostly offset by the increase of the financial costs with RON 129 million.
Then, we have also an effect, negative effect of the depreciation amortization of fixed assets of RON 118 million. But out of this, RON 162 million is the amortization related to the network losses. Going to the next slide, we have the highlights on the distribution segment where you can see also detailed EBITDA analysis for this segment compared with the elements mentioned on the previous slide. I will also add that the result on the distribution had two offsetting effects. One positive effect for change in provision of RON 23 million, but also some unfavorable effect of RON 28 million, which is related to adjustment of depreciation of receivables, mainly as a result of some legislation's registration of provisions for litigation. In terms of net result, the net result increased by RON 178 million, mainly from the evolution of EBITDA, which increased by RON 437 million.
And then this is affected by the unfavorable result related to financial cost, increase of RON 57 million. Mentioning distribution, we should add that there is an increase in net debt by RON 138 million compared with last year, which was mostly related to increase of loans for financing the construction of electrical network, long-term loans of RON 240 million, and some other slight variations on other elements of debt and cash. Going to the next slide, this is the summary of the distribution segment result in more detail. There is also the net debt that I mentioned the previous slide. You can also see that in this distributed energy margin, we have this year a significant positive result compared with the previous two years.
Then there is also the detail that we generally mentioned related to the correction with which we started this regulatory period. Moving to the next slide, we have our already traditional slides, where we start from the regulated asset base and we go to the regulated profit and then further on to down until the IFRS result, IFRS 2844, yeah, OMFP 2844. So starting for the RAB 2023, we have the correction that we mentioned which we started the regulatory period. Then we have these differences related to the fact that the rate changed during the regulatory period, you know, from 6.9 then to 5.66 and then finally 6.39. You see, an impact of RON 215 million in network losses excess. Just to put it in perspective, this is a good performance. It's a saving.
Basically, we were given by the regulator RON 305 million revenues corrections, and a higher price estimated for the network losses, and we achieved a much better price. So this is why we made a saving, basically, of RON 215 million. So we remained with the difference of correction 305 minus 215. Then you have, starting from the regulated profit, moving to the next slide, so RON 1,834 million, you find this also in this slide and going further because here we are showing the analysis starting from net revenue, total net revenue, and then going to the regulated result. Yeah, it's another type of evolution of split. And then going from this down, with the putting into emphasis the difference between accounting or regulating distribution and then to the operating result and then going down to the statutory result under OMFP 182 of RON 538 million.
Then from here, with adjustments from OMFP 182 to the localized IFRS, OMFP 44, with the net result of RON 486 million. Going then to the next slide, these are the usual slides related to the performance of the operating areas. Under there, I should point out that in terms of network losses, we are within the percentages introduced by NRA, with the exception only of one area, which is Muntenia Nord. If we go there, there is a slight excess there, but that's more related to the fact that, as previously mentioned, 2022, the way of estimating the distributed amount changed, and we have introduced, according to the legislation, the consumption conventions, which were based on previous estimations. In many cases, there were no reading of the meters back then. Now this starts to correct and adjust.
You know, this is an ongoing process. So for next year, all the conversion will be based on more accurate data of historic readings. Going then to the next slide, in terms of financial impact of the electricity market, there is, besides the detail related to the network losses that I covered before, we should mention that the distribution energy decreased with 3.8%, compared with the previous year. You will see also in the decrease in the supply area. This is aligned somehow with the general decrease of consumption, generally of energy, which is caused by, you know, consumers' energy efficiency efforts at the level of consumers, etc. In terms of investments, we have made 108.2%, yeah, of the CapEx plan for 2023, which included also RON 135 million representing recoveries related to the year 2022.
Had a delay, as you remember, due to the pressure on the financing of network losses. Also, we should mention that, we have also additional costs, additional works of RON 122 million, in this, CapEx plan compared with the 2023 plan, which are resulting from the legislative changes related to the connection. If we move further to supply business in the supply segment, we had an EBITDA decreasing by 85 million RON, which is mainly, resulting from, the decrease, in the revenues from the supply of electricity and natural gas by RON 906 million, which is mainly a result of the decrease in volumes of energy by 9%, as previously mentioned. Then, we had a positive effect, which is, generated by several elements. One is the increase, of the, subsidies to be received under the mechanism of, protecting the end consumers, the support scheme.
We have also purchased energy cost decreased by RON 113 million, which is determined by the positive effect of unrecognized capping components according to the Law 357 of 2022 of acquisition costs. Basically, we should mention here that it's about the fact that for some quantities and from some periods, we budgeted acquisition costs, which were above the ceiling, and we managed to have a better performance. We had all the costs of acquisition under the ceiling during the entire period, and this created this effect. The net profit is also affected, besides the evolution of EBITDA, by the effect of the financial result, which, the financial cost increased to RON 97 million, due to the fact that we were in the situation to continue to finance the support scheme, as you can see also in the net debt position.
Net debt increased by RON 443 million compared with previous year, which is mainly as a result of this, you know, increasing, the drawn amounts for pre-financing the support scheme. Moving to the next slide, here you have the competitive market share, and total market share for November 23, 2023, and you have the position of Electrica Furnizare in the market. Then going to by number of consumption places, we are still the leader. Here you have the key operational indicators. You can see the split of consumption places, which is relatively stable. Then you can see the evolution of electricity supplied on the main retail market. Yeah, it's, as you can see, there is, let's say, a decreasing trend. This to be put, also, to be justified by the decreasing of the consumption.
Of course, there are also some new suppliers which are growing on the market, but from our point of view, we consider that the level of 8 TWh is the level at which we are comfortably operating. Then going to the next slide, you have the details about split of electricity volumes to markets and then electricity revenues to market and also details about consumption places. Going there to the next slide, here are details relating to the change of legislation, how this was implemented, but also related at the end of the slide to the impact of the acquisition of energy because MACEE also helped the acquisition of energy for the supply business. Although there is priority for the TSO and DSO, then the supply companies are benefiting for these amounts, both at the yearly allocation and then at the monthly allocations.
And this combined also with the efforts of our team, increasing knowledge and efforts to purchase energy at very best prices possible. You can see on the left the evolution of the average price on the Day-Ahead Market where the blue line is this year. Yeah, you can see that we are in a more stable format and with the decreasing trend. And then also including on the balancing market where the prices were still in a totally different pale than next year, than previous year. Going to the next slide, then in terms of receivables analysis, in terms of what we collect from the customer, we are still very happy with the evolution. We don't see any issue regarding timely collection of the receivables from the customers. As you see, in terms of adjusting this level of outstanding receivables with the turnover, the level is decreasing.
It should be mentioned that, you know, some detail delays in terms of the IFRS 9 were still, you know, generating bias in the sense that in some cases, we delayed invoicing due to changes in the algorithm or changes in our in our system. So this somehow impacts artificially the calculation of the IFRS 9. It should be mentioned that, with the introduction of Ordinance NRA 5/2023, which allows for providing installments for the customers which were invoiced with delays. We don't have necessarily that significant amount, but there is an increase from RON 12 million to RON 52 million at the end of the year in terms of receivables which are put into installments, of course, compared with the total amount of receivables. It's not material. Going to the next slide, here it's Electrica Serv.
Electrica Serv benefited of an increase of revenues by RON 24 million because there is this increasing trend of demand for solar and photovoltaic systems, which generate new contracts. But then, you know, there is also sometimes a delay between, you know, when you purchase some stocks and you incur some expenses related to these projects which have a long, let's say, cycle and, you know, there are a lot of projects to be commissioned in the future. Going to the next slide, this is the summary related to the production segment. We had decrease on the revenues for the production because for the Stănești Park, we had, of course, decreased revenues along with the decreased prices of energy in the market. The park is providing the energy on the Day Ahead Market, and there is, of course, the evolution related to that.
Then you have also the structure of the production segment with the various at the end of the year with the various companies, out of which, you know, that we merged Electrica Producție Energie , Electrica Energie Verde, and GECI in Electrica. So these are introduced in the financials for this year. Going to the next slide, this is the group liquidity position as we used to post it after the pandemic and then with the evolution of the support scheme when we needed to finance a lot the receivables to be recuperated under support scheme. As you can see, the position at the end of the year, it's relatively similar with the one at the end of 2022. Going to the next slide, it's the element related to the dividends, which was covered by my colleague. And then, you have the annexes.
I would say we are welcoming your questions from now on. Thank you.
Excuse me. Can the management hear me?
Yes, please announce the Q&A.
Of course. Thank you.
Thank you.
Ladies and gentlemen, please note that for those participating via webcast, kindly follow the instructions indicated and either type your question via the box or dial into the audio conference. At this time, we will begin the audio question and answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. For those participating via the webcast, please dial your questions in the question box in the webcast. For those participating via the audio, please use your hands and when asking your questions for better quality.
Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question comes from the line of Andrei Ioana with Alpha Bank Romania. Please go ahead.
Hi. Thank you for the presentation. I have just one question regarding the budget proposal. You've proposed on the standalone budget a dividend income of only RON 60 million, if I'm not mistaken. Can you explain a little bit why you don't expect to distribute this year net profit from on a standalone basis? You are referring to the distribution proposed by dividends?
I think it's RON 40 million. It's RON 0.1178, if I'm correct. And this is, as mentioned also by my colleague, this is related to the fact that on one side, we still have RON 2 billion to be recuperated from the Romanian state under supply scheme.
I'm thinking about budget. Okay. Yeah, in the budget.
No, I'm thinking about the budget and the next year dividend because we should have seen in the budget proposal for Electrica standalone already a dividend income, significantly higher.
No, but we are not mentioning here the proposal of dividends in the budget. The proposal of dividends will be at the end of the year after we see the results. And then, when we have the actual next year, we'll make a proposal for the dividends to be distributed. Now, if you look at this profit for the year, you should also take into consideration that we are developing the production, so we are keen on also supporting this development and growing of the business. The dividend at the end of 2024 will be decided back then depending on the results. Indeed.
But, you should have on a standalone basis, the support coming, streaming from the dividend income that should be distributed this year from your subsidiaries, right?
Also in terms of the subsidiaries, if you look at distribution subsidiary, of course, we could take a look at the distribution of dividends from them, but you should first consider that there is a lag. So basically, the profit, which is done by the operating subsidiaries in, let's say, year N, it is to be constituting dividend distributed to Electrica in year N+ 1. And then it reflects in the profits of Electrica in the N+ 1, which are paid as dividend in the N+ 2. So there is always this delay. This is one thing. The other thing is you should consider that, the distribution subsidiary, okay, besides.
Okay, they are doing a profit, significant profit, but they should also keep investing similar amounts, which the one which were invested in the last couple of years until 2030. I mean, if you look at the entire plan of transforming the energy sector in Europe, this is based on the transformation of TSO and DSO. And from this point of view, we need to continue the investment. This will not mean that we will not, you know, have this dividend distributed from the distribution subsidiaries to Electrica and then to the customers. But, you know, we had some situation in the past where, you know, investing more than 100% of the amortization and then distributing all the profit up. This is not sustainable on a long run for such a long tenor.
Then, yeah, for the other companies, we would take a look at, you know, dividends, considering the case, but after we recuperate the losses from the past, you know, now from the supply after this year, we'll be covering the loss from 2021. I will just point out that if you look at the history of our results, you could see that 2021 was really a one-off. Yeah. And after that, we kept on posting 2022 and also 2023 solid results. Yeah, but we will need to balance it with the requirement to grow the business, you know, both investment in the distribution subsidiaries and investment for developing the production network, the production capacities, the production subsidiary or sector segment. Right now, we went. But. Yeah.
But my question is, in the budget proposal for Electrica standalone, right, there the proposed projected income from dividends, it's what you are expecting to distribute this year? It reflects what you are expecting to distribute this year? So you're referring to the RON 60 million that's stipulated as dividend to be recuperated? Yes.
Yeah. So this is the case. For the supply.
This is what you're expecting.
Subsidiary, we are just, you know, covering the loss from the past, and we'll be able to consider dividends in the future. For the distribution subsidiary, right now, we considered, yeah, this amount because, as we said, we are taking a look also at the future plans for CapEx in the distribution subsidiaries, which are quite substantial.
Now, going in the time for the next year, we will, of course, evaluate at each point. But right now, this is the amount which is budgeted, yeah.
Yes. Okay. Thank you.
As a reminder, if you would like to ask a question, please press star and one on your telephone or type a question in the question box in the webcast. Once again, to register for a question, please press star and one on your telephone. As a final reminder, to register for a question, please press star and one on your telephone.
Okay. So looking at the questions that we received from one of the analysts.
Oh, we can, I think we can ask along, answer along the way, so in terms of asset base, I will pick them, you know, you say yours, I will pick them, you know, depending on how easy it is to answer. So are you looking to revalue the asset base? When would that happen? I don't see revaluation in the consolidated statements. You should see note 23 of fixed assets. All the fixed assets are revalued at the end of 31st December 2023, as we also discussed in the past. You should note that that's per the IFRS adjustments in case of the assets which are in the regulated asset base for which we are, you know, adjusting down. We are, you know, taking down the revaluation results.
So for there, you'll see in the financials, the results without the impact of the valuation because these are the IFRS standards. But if you look at note 2023, we revalued the assets along with the discussions that we have. And, you know, thinking at the other element of, I mean, what's behind your question? Yeah, we revalue the assets for distribution, which will be shown in the statutory standalone on the distribution in order to be sure that at the end of the regulatory period, we have room to get the difference of inflation in the RAB. Going to the next question.
I'll pick up two questions. What do you expect regarding the compensation due from the state and the net debt position? So we have a positive view on 2024 regarding the compensation due to the state.
We hope end of the year, the situation will be much positive, in recuperating these amounts, and we'll see the net debt decrease with at certain points. I think we will have a payment in June and most likely in September and on the following months, or in between, we'll see some smaller payments. We don't have the same pressure that we did last year. So now, due to the decrease of the energy cost, these amounts will decrease.
Assumptions regarding the debt position leading to the evolution of the financial expenses that we see in the budget. What is quite important for us is to keep the level of indebtedness at the usual ratio, yeah, net debt per EBITDA maximum three, okay, temporarily maybe 3.5 if we have a significant M&A ongoing.
But we are very keen on maintaining this level at the level which is accepted by all the financiers, also the most, let's say, conservative. And also, it is very important to be aligned with the criteria of Fitch for investment grade. So what we see as the evolution of the debt during the year is that at the end of the year, we'll be still with under the 3x net debt per EBITDA. The financial expenses would benefit, okay, we would evolve, let's say, in a path in which there'll be more significant in the first part of the year. But then towards the end of the year, along with the payments and so on, this should decrease. And also, we are counting on some decrease, slight decrease on the financing cost.
But in terms of the position, it should be mentioned that, you know, all the efforts related to development of production should be made only when we are able to decrease the debt which is related to the pre-financing of the support scheme, you know. So as this is decreasing, we should focus them and, redirect them toward, part related to development of production, but in any case, still being below 3x net debt per EBITDA. What do you plan to do with the funds from the bonds issuance? The amount seems excessive for the current pipeline of renewable capacities. I will not necessarily comment I mean, there are details in the note that in the material for the GMS that this is related to, mostly, generation, yeah, development of generation. This is an approval in principle.
So when you compare this for the pipeline, you should also consider that it's an approval in principle which is covering two years. Total level of correction net that would affect in the 2023 JAINA. Correct me if I'm wrong, but I think that this negative correction from 2023 will be reflected in 2025, and it will be, in particular, related to this reactive energy revenue. Where do you see the cost per megawatt for new capacities? As I understand from my colleagues which are covering this this business, it's clear and from at this moment that the cost per megawatt is decreasing. But we can't make right now assumption about market cost because the cost per megawatt also depends on the chosen technology, and it depends on one capacity to the other.
What we could assure you is that, we are caring for each project, competitive procedures. I think one of the projects, we had like 16 offers or something, and we streamlined this process. So for each investment, we'll be focusing on securing the best price-quality ratio. Then you should also take into consideration that nowadays, it starts to be a screening also from the financiers regarding, suppliers because if you are speaking about suppliers from China or something, they are supplier and suppliers. So this will also impact somehow the evolution of the prices. How do you look at the value? I answered this. What's the expected return on investment for the production asset? It should be between 9%-11%. Of course, it depends from one project to the other.
What you should note is that for us, these projects are not necessarily only considered under this, return of investment per se. But for us, it's important to have a capacity of production which to match somehow, you know, at least part of the supplied energy so that we are securing the position of the group in terms of, consolidated results. I mean, if you would have had some production in the end of 2021, the result would have been, positive, in the black.
Management, are we done with the webcast questions?
Please ask again if there are any more questions. Thank you.
Thank you so much. As a reminder, if you would like to ask a question, please press star and one on your telephone or type a question on the question box in the live webcast.
We have an audio question from an audio participant, Mrs. Juliana Gioria with Wood & Company. Please go ahead.
Hi. Hi. Hi. Good afternoon. Just very briefly, so on the RAB, you did the revaluation, but I see in the, I mean, I see the net value of assets somewhere around RON 6.2 billion. So it's quite far from the RON 7.2 billion. So that's why I was asking if this would be enough for the year for the regulator to recognize the adjustment with inflation. And also on the financial expenses, I mean, in the budget, we don't see any decrease in financial expenses. And that's why I was asking basically why you see them rising in the income statement. Although I hear that you basically expect net debt to come down. So just a bit of clarity here.
Are you being cautious on the financial expenses, or is there something that I'm missing? Thank you. Regarding corrections, one last point regarding corrections that you mentioned. So basically, what you're saying that can you detail a bit exactly what corrections we should be expecting regarding in 2025 net corrections, of course? You mentioned reactive energy, but just yes, I would something about the size would be terribly helpful. Thank you.
So, the negative corrections are published in the report of administrators. It's RON 150 million around, yeah? And there is also the detail about them. In terms of fixed assets, I know you're the 7.2 to which you are comparing. We can have a discussion detailed, and we can provide you when we are having the financial standalone. On the IFRS, you don't see the revaluation.
I mean, this is the principal under IFRS for the RAB, for the RAB assets. We are not showing, in the in the IFRS consolidated the revaluation, yeah? We are just, you know, showing, you know, the addition of the capex over the during the year, but it's not shown there. Juliana, if you could. The 7.2 that you are mentioning is related to, the calculation which was done by NRA, you know, based on 13-point-something inflation, yeah? But you don't see it in the IFRS because the revaluation, it's not shown on the IFRS based on their rules. We can discuss this in more detail, as always, as you know. In terms of financial cost, yeah, it's true. I mean, the idea is the this is supposed to increase during the year and decrease back towards the end of the year.
In the first part of the year, there is increasing cost, yeah? Towards the end of the year, we factor in some decrease of the interest, but it's conservative, let's say. So, we should prefer to take a look at this point of view, you know, in a more conservative way. I don't know. What other question? This is what I remember, the revaluation of RAB, the financing cost. What else, Juliana? I missed something?
No, no, no. That's good. That's good. That's all that I wanted to know. Thank you so much.
Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to management for any closing comments. Thank you.
As always, if you have any more questions along the line, we are here to help in any way possible.
We try to be as transparent as we can regarding the projects. As soon as we have news, we will publish them, and we'll announce everybody on our prog ress. Thank you so much.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.