Earnings Call: H1 2021

Jul 30, 2021

Good morning, and welcome to the EDP-1H twenty one Results Presentation. My name is Charlie, I'll be the coordinator for today's call. Call. I'll now hand over to your host, Miguel Viema, Head of Investor Relations to begin. Miguel, please go ahead. Good morning, ladies and gentlemen. Thank you for attending EDP's first half twenty twenty one results conference call. We have today with us our CEO, Miguel Stroud Andrade and our CFO, Rui Teixeira, which will present to you the main highlights of first half twenty twenty one financial performance and an update on strategic execution. We'll then move to the Q and A session, which will be taking your questions both by phone and the written questions that you can insert from now onwards at our webpage. This call should take close to sixty minutes. I will give now the floor to our CEO, Miguel Troldandras. Thank you, Miguel. Good morning, everyone, and thanks for attending the call today. I hope you're all well. Before I move into the results, I just wanted to highlight, I think it's really positive that we begin to see economic recovery and also the continued political support for the energy sector. So I think that's certainly a very good tailwind, and we're all very excited really about what lies ahead. In terms of the first half results, a couple of key numbers, which I think are worth highlighting. First, we continue to accelerate the growth with growth investments increasing almost 30% year on year, so now around €1,600,000,000 So that's a clear indication of the ramp up in growth. We've also ramped up the renewable developments in terms of megawatts. So we now have 3.6 gigawatts of capacity installed and under construction, around 700 megawatts added year to date and 2.9 gigawatts under construction as of June. We also have full visibility on our asset rotation strategy for this year, which continues to really highlight the value and the quality of our projects, both on wind and solar. As you know, we completed the asset rotation deal in The U. S. We had a capital gain of around €250,000 per megawatt, which is above our business plan assumption of around €200,000 per megawatt. We also recently announced the asset rotation deal in Portugal, which combined with previous announcements amounts to a total of EUR 1,900,000,000.0 of asset rotation proceeds at very attractive multiples. So altogether, approximately 25% of the 8,000,000,000 asset rotation target that we've given until 2025. Recurring EBITDA, excluding ForEx, decreased around 1%, so reaching 1,700,000,000.0 approximately. And just to give you some highlights on the impact on this. So the semester, as you know, was penalized by below average wind resources, also lower asset rotation gains versus our versus last year in the renewables platform. But we also had a challenging quarter on the Energy Management division, and we'll give a little bit more information on that. And this was obviously impacted in the context of the strong increase in power prices in the wholesale market. So that translated into higher sourcing and production costs and had also some negative mark to markets, mainly on gas contracts. Also worth noting, from an integrated risk management perspective, part of the negative performance is offset by the positive results in the hydro generation in Iberia as well as in the Supply division. So our diversified portfolio allowed us to partially mitigate these effects with some positives and some negatives. We had a very positive performance in the electricity network with recurring EBITDA increasing by 33%. And so bottom line, recurring net profit reached €326,000,000 and reported net profit of $343,000,000 mainly impacted by a nonrecurring gain of €21,000,000 booked in the first quarter in the Supply division in Spain relating to the sale of the assets last year. If we move on to Slide four, so talking a little bit about growth. We can see we continue to accelerate the growth. We have 2.1 gigawatts of capacity added in the last twelve months, of which 700 megawatts added in the year to date. And as I'd mentioned, 2.9 gigawatts under construction as of June. Secured capacity, we now have 6.7 gigawatts with the recent 200 megawatts we just signed this week and also visibility on additional 3.7 gigawatts of PPAs in advanced stage of negotiation. So overall, strong short term visibility on additional PPAs. And of course, we'll be participating in several auctions over the next couple of months, which total over 30 gigawatts of capacity to be awarded until year end in our European markets. We also continue to expand our footprint into new markets with high growth prospects, and we recently entered Hungary, Chile, Vietnam, U. K. Onshore market and also offshore in Poland. So on track with our commitment to deliver the 20 gigawatts by 2025. Move on to Slide five. So the 6.7 gigawatts of capacity secured, now almost twothree of our 'twenty one to 'twenty three target additions. As I mentioned in EDPR's conference call, we've been able to secure this capacity at attractive returns, in line with our disciplined investment criteria, which you are all very familiar with. We secured capacity across all technologies and above our investment thresholds, both from a return and risk perspective. So all in all, spread over WACC of for the 6.7 secured so far at three twenty basis points. And from a risk perspective, we continue to focus the investments on long term contracted assets and have a contracted NPV above 60% of the total NPV of the project. And we use this as a proxy for the risk because we're basically locking in upfront already a big chunk of the value of the project. So obviously, having these type of projects is key to the success of our asset rotation strategy, given the quality of the portfolio and the type of assets that investors like to buy. Go on to Slide six. So here, I'd just like to address some concerns that have been raised in the sector regarding CapEx cost inflation. Now as you know, we've already talked about this, but I'd just like to reiterate that we are well protected from CapEx cost inflation. Our investment policy is to contract major equipment upfront at fixed price so that when we take the investment decisions, we're doing it based on real time quotes requested from suppliers and then typically locking them in. So at every point in time, we're incorporating in our investment approvals the most updated CapEx estimates. We then reflect this in the PPA or auction bids and are therefore passing through any CapEx cost inflation and keeping our returns stable. So we've covered this in detail on the EDPR call, but bottom line, overall, our exposure is limited. Go on to Slide seven. So as I mentioned, asset rotation, six months into the business plan, and we already have around EUR 1,900,000,000.0 secured, so 25% of the overall target for the five years. So very solid execution by our teams. As you know, we like to front end the business plan and really try to do most of this in the first couple of years. More importantly, I think it's a great performance in the multiples achieved, and as I say, with the strong appetite from investors. Overall, multiples achieved are at an average of 1,600,000 per megawatt correspond roughly to €1,700,000 per megawatt for wind and €1,250,000 for solar. Obviously, there are CapEx differences in the cost per megawatt of wind and solar. We also recently completed an asset rotation deal of a wind portfolio in The U. S. Of four zero five megawatts, around €500,000,000 of asset rotation proceeds. It had a capital gain of about €100,000,000 You can see that there on the left hand side of the slide. So summing up, we're on track to exceed our business plan targets and deliver capital gains north of the €300,000,000 in 2021 and really excited to see the asset rotation execution has been very solid in these last couple of months. Moving on to Slide eight. We're talking about policy. So we see the policy environment still very supportive of the energy transition. I mean, just since Wednesday in The U. S. Following Biden's Americans job plan, the Senate has now passed a key milestone in infrastructure bill. And that includes additional support on investments in electricity grids of around $73,000,000,000 which are critical for renewables growth. As you know, one of the key issues in The U. S. Is having good transmission networks that we can connect renewable projects to. And so we think this is a very healthy sign, which will be good news for the renewable sector in The U. S. In late June, we also had positive news from the IRS decision to extend the PTCs and the ITCs by around two years. So taking into consideration some delays related with the COVID situation, This is clearly positive for our investments in The U. S. With the planned commissioning over the next couple of years. In Europe, as you know, the Fit for 55 legislative package enhances again the widespread political support on decarbonization. It increases the renewables growth targets and mechanisms for the sector, includes reforms to the EU emissions trading scheme. And I think it's also worth highlighting increased guidance and financial support for contracting of renewables PPAs by SMEs. So this is very much in line with the expectation of a growing PPA market in Europe. All of this, I think, calls for strong fundamentals and unprecedented growth in renewables. And I've referenced this in the past. But if you look at the IEA, International Energy Agency, Net Zero roadmap, it's expected to represent around 90% of electricity generation by 02/1950, the renewables. So again, good news for the sector. Slide nine. So talking about networks. So networks have been extremely resilient. And I think we continue to deliver strong operational performance. I think the team has done great work here. Overall, distributed electricity increased 14%. There was a good economic recovery across all our geographies, but also given the acquisition of Diesgo. In Portugal, we significantly ramped up the deployment of smart meters, and we've got a share of now almost 60% in June. And I think this is also important to note, the Networks platform has also been a very important driver of efficiency for cash recurring OpEx decreasing 5% on a like for like basis. The Edgemont integration on track. Mentioned this, the new collective labor agreement signed last month. This is a key milestone for the integration plan that allows us to move forward with a significant part of the restructuring, so also an important milestone to highlight. And in Brazil, the Networks operations also show very solid growth. So we've talked about the acquisition of a transmission line in the state of Maranhao, where we awarded the largest batch in the recent transmission auction, and that increases our overall transmission portfolio to eight lines. So six of them in operations or in advanced stage of construction. One point I wanted to highlight in relation to transmission in Brazil. Given that we see very interesting value creation in the development of these transmission lines, we're now considering the implementation of an asset rotation business model transmission in Brazil, where we crystallize some of this value upfront and rotate the capital into new greenfield transmission projects that are either permitting or pre construction stage. So this is something that we're also working on and hope to give you some visibility in the next couple of months. So on Slide 10, and just a note about Client Solutions. And I think really some very interesting numbers. First, the penetration of value added services continues to increase, so up 5% to around 30% in the first half. Focus very much on service quality and leveraging our customer portfolio to increase the share of wallet. So it's proved to be a very successful strategy so far. And also, I think really interesting to highlight is Solar DG really taking off. It's almost doubled the installed capacity of distributed solar now at around 190 megawatts peak versus the first half of last year, both transactional and also as a service. And also in terms of mobility, public mobility and private charging points, a relevant increase. So I think also worth highlighting these two numbers. Finally, if we go to Slide 11, I I wanted to address that EDP, as you know, has been working hard to adjust its business portfolio towards the energy transition across all divisions. And I just wanted to highlight three business divisions that represent today the bulk of our Iberian operations. The first one is hydro in Iberia. We have around 5.5 gigawatts, of which more than 40% with pumping capacity. As you know, this is a flexible renewable technology that will be critical for to complement the growth of other variable renewable technologies, namely solar. And as you'll recall, in December 2019, we agreed a deal with a consortium led by Engie for the disposal of 1.7 gigawatts of hydro capacity for a total of 2,200,000,000 So at that time, the forward power prices were significantly lower than today. I just highlight this point because I think that's important in terms of doing a read across for our existing portfolio. We've also reinforced our presence in electricity networks, so the second piece of the business. We now have a regulated asset base of €4,600,000,000 in Iberia, now including the Biesgo acquisitions, which I've mentioned is the integration is going very well. So think we continue to believe that the electricity networks will play a key role in the energy transition. And finally, we have a portfolio of 4,000,000 clients in Iberia. And the strategy is to continue to increase the share of wallet for clients with the new services, namely distributed solar, where we see a very interesting growth opportunity. As you know, this business was more mature not more mature, but it's been growing in the past in Portugal. In Spain, it's more recent. And so there's a huge market opportunity really to explore there. And we are seeing that and the teams are doing a fantastic job in building out the business in distributed solar in Spain. Overall, we believe the recent equity market performance of EDP, particularly if you consider the relative market value of EDPR and also the implicit value of EDP's Iberian business, doesn't reflect the fundamental value of these operations, which I just talked about, and which are very well placed to benefit from the opportunities in the energy transition. So I'll just leave that comment there, and I'll turn over to Rui Teixeira and then come back for closing remarks. Thank you. Thank you, Miguel, and good morning to you all. So on EDP's performance for the 2021, I'd like you to move on to Slide 13, please. So recurring EBITDA decreased 6% to one point around €7,000,000,000 so that's $168,000,000 euros by the first half twenty twenty one. If we were to exclude the ForEx impact, actually, the performance would be relatively flat versus year on year, so it would be a 1% drop. So recurring EBITDA from the renewables platform was penalized by weaker wind resources, particularly in U. S, which was 6% below average. Brazil and Europe was good as we presented in the results two days ago. Aircraft impact impacting the '1 results, of course, negative impact that was concentrated in the first quarter. Lower asset rotation gains when compared to last year. I think it's important here to note that we booked in the first half twenty twenty of capital gains of €145,000,000 versus what we are booking this year in the first half of €118,000,000 This performance in women's solar was partially offset by the good performance that have in hydro. In the electricity networks, recurring EBITDA increased by 32%. And of course, this benefits from the integration of ESCO, which had an €86,000,000 in EBITDA contribution, a strong demand across all regions and around improved financial sorry, operational performance. In Client Solutions and Energy Management platform, this was penalized by the sharp increase in energy prices in the wholesale market, particularly in the 2021. This imply a higher production and sourcing costs, but also negative mark to market impact on hedging contracts. Part of these results are mitigated by a stronger than expected performance in hydro in Iberia, with a realized price of €57 per megawatt hour. That's above the hedged price of the base load production for 2021 of €45 per megawatt hour. This also compares to an exceptional positive performance last year. If we move now to Page 14, EBITDA from EPPR declined 18% year on year to €654,000,000 or a 13% drop if we were to exclude the ForEx impact. Despite this, the 10% increase of installed capacity supported naturally by the additions over the last twelve months, As I mentioned before, EBITDA was penalized by overall weak wind resources, so that's overall 5% below average. The negative impact from the Polar Vortex in February, 35,000,000 impact, and lower asset rotation gains when compared to last year, so that's minus €27,000,000 If we move now to Page 15 on the Hydro, adjusted by the change in consolidation perimeter, Hydro recurring EBITDA increased 22% to $353,000,000 In Iberia, our EBITDA increased by €58,000,000 year on year, impacted by a 10% year on year increase in hydro production. Also, as I said before, realized price benefited from the context of higher pool prices, even though our expected output is hedged at €45 per megawatt hour. So I think it also reflects the quality and the flexibility of our hydro portfolio. Results were also positively impacted by the reversion of some hydro levies in Spain following the recent court decision, which amounted to €47,000,000 In Brazil, the hydro EBITDA increased 9% year on year. We know that there is a hydro crisis in Brazil, but we are experiencing, of course. But performance was well supported by the hedging strategy in place, with more energy allocated towards the 2021, which protected the portfolio from the impact of the GSF and the consequent price volatility that we have witnessed in this period. We now move to Networks on Slide 16. The semester was marked by a strong performance of this business, with a recurring EBITDA increasing 33% year on year. In Iberia, EBITDA amounted to EUR $418,000,000, that's a 32 percent improvement comparing to the first half last year. And naturally, this is on the back of the Viesco's integration and also a EUR 22,000,000 increase in Portugal due to OpEx savings and a result of also some gradual increase in digitalization, rollout of smart meters and also some lower headcount, so very focused on efficiency. In Brazil, EBITDA rose 38% to €168,000,000 that's 65,000,000 in local currency, and this is mainly due to the increase of volumes distributed in electricity, which they are up by 10 year on year. The positive impact from inflation indexation on distribution annual tariff updates. I would just like to remind that the annual tariff updates were 8% in EDP disputed subs that was in August 2020 and four point eight percent in BP Sao Paulo that was in October 2020. EBITDA is also positively impacted by the partial commissioning of the two transmission lines and the evolution of construction works in the remaining lines. We move now to the Platform, Client Solutions and Revenue Management on Slide 17. Recurring EBITDA declined 71% year on year versus a very, I would say, exceptional strong performance in the first half twenty twenty, which included still a positive EBITDA contribution of €42,000,000 from Sine's coal plant that was shut down at the 2020. The second quarter of this year was particularly challenging with an EBITDA of minus $4,000,000 in which the energy management activity in Iberia was penalized by the sharp increase in the energy prices to really record high levels. These have increased energy sourcing costs and also implied some negative mark to market impact from hedging contracts for future periods. Part of these mark to market losses are also expected to be reverted in the near term and are mostly noncash items. I think it's also worthwhile mentioning that part of this negative performance is offset by the positive results achieved in Hydro Iberia as well as the strong performance in our supply division as we kept the average price of energy sales to its customers on a stable basis. So assuming the maintenance of the current high energy prices in the current market environment for the second half of the year, we are expecting our Client Solutions and Energy Management segment to deliver an EBITDA in the region of the €200,000,000 The third quarter should still be penalized by this context of higher energy prices, but also, it will we are expecting it to be compensated during the fourth quarter of the year. For the next years, we see an improved level of our forward contracting. So for 2022, we have already hedged close to 100% of our expected baseload generation at the wholesale price of €57 per megawatt hour. And for 2023, we have now 30% of our expected generation volumes attracted at an implicit baseload price of €50 per megawatt hour, which is above our business plan assumptions at roughly €47 per megawatt hour. So now moving into efficiency on OpEx on Slide 18. Excluding growth for a like for like comparison, OpEx improved by 3% year on year. And of course, we continue driving efficiencies across the business. So although we have a higher headcount at EDPR to support growth, this was compensated by a leaner organization. Networks OpEx, excluding growth, declined by 5% year on year as we continue to increase digitalization and also due to a lower headcount. Our efficiency program has now over three thirty initiatives identified, which has already captured €24,000,000 in savings in this first half of the year. That's mainly in human resources initiatives and optimized procurement in Brazil. So I think very focused on driving efficiency and delivering this impact in terms of value to all shareholders. On Slide 19, a quick overview on the financing costs. So adjusting by a €57,000,000 one off cost that is related to the repurchase of outstanding bonds in the first half this year and the ForEx gains, net financial interest fell by 10% year on year to €264,000,000 and this is mainly driven by approximately 20 basis points decline on the average cost of debt from 3.3% to 3.1%, a 4% year on year decline debt in the average debt. And also in January 2021, we had two bonds maturing with coupons of 5.254.125%, which helped to lower the average cost of debt. I think it's also worth highlighting that in the July, we also concluded a cash tender offer for €647,000,000 of short term outstanding bonds in the proactive liability management that we will attribute to lower our recurring net financial costs over the next quarters. Net debt on Slide 20 increased by EUR1 billion to EUR13.2 billion in this half of the year. So recurring organic cash flow of EUR0.5 billion sorry, EUR0.4 billion, that's penalized by an increase in working capital related to proactive management decision to anticipate payments to suppliers in order to optimize treasury management and, of course, in this context of high financial liquidity. Euros 750,000,000.00 related to the annual dividend that was fully paid in April. 1,800,000,000.0 of net expansion investments following acceleration to the build out activity to 1.4 with $1,400,000,000 of expansion investment and the anticipation of bill payments to fixed asset suppliers of around $900,000,000 So this was partly offset by $500,000,000 proceeds from the asset rotation bill that was completed in The U. S. We also have a positive impact from the EUR1.5 billion proceeds from EDPR capital increase in April and EUR0.4 billion related to 50% of the $750,000,000 hybrid bond that we issued in January. Regulatory receivables increased by $400,000,000 mainly in Portugal, given that in the first half, there were no sales of the tariff deficit. However, in July, we have already we already announced the closing of a COP 500,000,000.0 tariff deficit in Portugal. Just to finalize here on the slide, FX of exchange rate fluctuations have a negative impact of COP 200,000,000.0 in our net debt by the end of the period. Net profit on Slide 21. So overall, we reached €343,000,000 so that's a 9% increase year on year. If we adjust by one off impact and the operations disposal in Iberia in 2020, recurring net profit decreased 15% year on year to million. I think it's important to highlight income taxes amounted to BRL164 million, representing an effective tax rate of 22%, and that's mainly due to the capital gains that are taxed in U. S. And uncontrolling interest fell 11% year on year to BRL154 million, mainly explained by the decrease in EDPR net profit. Just to finalize before I hand over to Miguel on Slide 22. I think it's important also to mention some achievements as we are continuing our delivery on the ESG excellence. So on the environmental front, I think we are all very pleased to share that the science based target initiative recognized EDP's 98% target reduction of Scope one and two greenhouse gas emissions by 2030 as that compares to 2015 level, and have also recognized 50% of absolute reduction of Scope three emissions over the same time frame. This means that the targets in our 'twenty one, 'twenty five business plan are in line with the climate science requirements towards limiting the global warming to 1.5 degrees and highlights the strength of our commitment to become coal free by 2025 and carbon neutral by 02/1930. On the social commitments, in the 2021, we represented 26% of EDP's workforce. That's a one percent increase versus the comparable period. It's aligned with our strategy, as you know. Also very committed to health and safety. We register a one point one one total recordable injury rate at EDP. And I want to emphasize how committed we are to make sure that safety is something present in the day to day of the entire people working with and for ABB. And we also invested EUR 6,000,000 in social investment during the semester. So I think with this, we also highlight some of our how we are delivering our commitment in ESG excellence. So with that being said, we are very committed to what's ahead. And I also would like to take the opportunity to thank you all for your time today. And Miguel, I would pass over to you now for closing remarks. Thank you. Thank you. Thank you, Ruig. So just before closing the call and going over to Q and A, just a couple of comments on forecast. So many of the forecasts by analysts have now been updated with the EDPR capital increase, now in approximately 90% of all analyst estimates. And so we wanted to reiterate our guidance for 2021 of a recurring EBITDA of €3,700,000,000 and recurring net profit above €800,000,000 We have very positive prospects on the asset rotation gains at both EDPR level and eventually in transmission in Brazil. We have strong growth in electricity network, and we will continue to ramp up renewable deployment in 2021. These positive trends should more than compensate a weaker year in energy management, penalized by the increase in energy prices in a short time period of time and implied negative mark to market on contracts, which would be unwound over the next couple of quarters. This guidance is based on stable ForEx and average wind and hydro resources for the 2021. And all of this reinforces our commitment to deliver the business plan. We just move to the following slide, Slide 25, and just highlight, again, a couple of comments. Quite honestly, and I've mentioned this before, we are very enthusiastic about the growth prospect on the several fronts where we're operating. We've been executing the growth plan with a focus on renewables and networks, with a total investment of €1,600,000,000 in the 2021. We secured already 6.7 gigawatts of renewable projects with long term contracts at attractive returns, so onethree of our 20 gigawatt target for 2025. And at the same time, we continue to successfully execute our asset rotation strategy given the strong demand and attractive multiples achieved, so reflecting the high quality of our portfolio. The acceleration of our growth is supported by our sound balance sheet and competitive funding based on green financing, which has had a positive impact on our average cost of debt. We will continue highly focused on risk management, namely regarding the current volatility from and also CapEx cost inflation, in which, as you know, we maintain a conservative risk approach. And we will continue to grow the organization, entering into new markets and increasing renewable capacity annual growth. So that's all something that you can see also in the numbers in terms coming through in terms of megawatts under construction and in terms of megawatts secured. We will continue to accelerate the contribution to decarbonization. You can see also the increase of the weight of renewables in our generation mix and also the execution of our coal phase out plans with the goal of becoming coal free by 2025. So very exciting time to be in the energy sector and for the company as a whole. Thanks very much for this quarter's call results. And we can now move to Q and A. And I'll pass it over to the moderator. Harry, your line is now open. Hi, everyone. Thanks very much for taking my questions. So three of them. First one is on hydro and energy management in Iberia. I just wanted to take stock of where we are this year versus what's a sensible projection for next year. And I guess just breaking it down into components. So hydro, obviously, looks like you're hedging at higher prices for next year. So I just wondered whether you could give us any kind of flavor as to what that might be what that might mean in terms of EBITDA? And then also on Energy Management, I think you mentioned on one of the slides that you expect GBP 200,000,000.0 this year. Obviously, this year is a bad year. Last year is a good year. What's a normalized year? What should we be putting in for Energy Management next year? So that's the first one. Secondly, on this transmission Brazilian transmission rotation plan, I just wanted to confirm, is that in addition to the operation you were planning on hydro assets in Brazil? And if there's something that you think could actually be meaningful from an earnings perspective? So could this be another sort of farm down gains line that we have on a recurring annual basis in the same as what we have for EDPR? And could it be meaningful for next year? And then finally, I apologize for the very open ended question here, but you showed quite clearly on the slides, I can't remember which number it was, number 11, But I guess the Iberian business implied share price obviously much lower. And I think given that you're now below EDPR in terms of market cap, and I think the combined Brazilian and Iberian business got a market cap of about €3,000,000,000 is incredibly low and implies an EBITDA multiple of sort of mid single digit or lower. I just wondered, is there anything you can do or anything you're thinking of doing to try and correct that or exploit it? And I don't know that maybe that's bespoke more disposals in Iberia. I know I've asked you that in the past, they don't appear to be on the agenda. But has the sort of share price move changed your view on that or may you consider something like a buyback or even some of your peers are considering spin outs? It just seems an incredible valuation discount and just interested to see if you feel there are any management actions you can use to take advantage of that. Harry, it's Rui. So I'll address the first question in terms of the energy management. So again, maybe just going a step back. So again, first of all, think that last year, we had an incredibly fantastic year. So that's we'll always be expecting some reduction vis a vis year on year. Secondly, in what concerns what's happening this year effectively, I mean, starting with the hydro, we do have a baseload hedging at, say, euros 45. But then the realized price and that has very much to do with the flexibility of the portfolio and the realized price that we can get from that inactive management is close to €57 per megawatt hour. So definitely, this is something that is impacting positively on the hydro side. We didn't it has a reflection on the energy management on the other hand. So basically, when we look to the energy management, I would say the following. I would say that we have a negative impact of around €75,000,000 which is a positive impact on the hydro. Then we have approximately €50,000,000 of a mark to market contract. It's a gas contract. Basically, we hedged TTF against Harryhub. So it's a fixed spread because it's how we are dealing with the hedging to our gas inputs. But then if TTF goes up, then on a mark to market basis, we have to book it up on a negative with a negative result. This is something that will be unwinding as we start using the gas. So we would expect this to unwind over the next quarters in 2022 as well. And then this particular quarter, the second quarter, we also had sort of negative impact in terms of sourcing to our customer base. So that's roughly also some €50,000,000 impact as well. So I would say that also to highlight what was the performance on the Energy Management side. I think that for next year, for 2022, what I would say is that we should see a recovery. As we shared, I mean, we have also increased the hedging on the base load to 100% at €57 per megawatt hour, which is well above what we were considering in the business plan. So I would expect a more normalized performance throughout the year 2022. And I want to hand over to Miguel for the other questions. Yes, thanks. Hi, Harry. So in relation to Brazilian transmission, so yes, it's in addition in the sense that we are considering doing some rotations of some of the transmission lines we have in Brazil. As you know, we've been building them up or constructing developing and constructing them over the last couple of years. They've been a good value driver. Once they are built, essentially, they become almost bond like. So we may we are seriously considering rotating some of these and redeploying that capital into new transmission projects. As you saw recently, we won one of the sort of big batches, as I mentioned, in the recent transmission auction. So that is something that we will be giving you an update probably over the next couple of months. Is it material? I mean, it's not very material in the overall context of EDP. So certainly nothing like, let's say, renewable asset rotation program. So but it is something we will provide further visibility on probably post summer. In relation to the third question, I mean, it's obviously a great question, very open ended, as you say. But all I can say is that we are aware, very aware of that delta that's picking up. That's why we wanted to flag it explicitly in the presentation. And we will obviously look at any opportunity or any option that allows us to bridge that gap or to remove that delta in terms of share price. So I think fundamentally, we don't think that the EDP share price is reflecting the sum of the parts. And that's something that we'll look at and see how best we can do that. It can be just sometimes perhaps it's just providing more information and continue to give visibility as we are doing on the intrinsic value of the assets. But then obviously, we will always consider all options as we've always done. Okay. Thank you very much. We can go to the next question, please. Our next question comes from Sarah Piccinini of Mediobanca. Sarah, your line is now open. Hi, good afternoon and many thanks for the presentation and for taking my questions. Have a first question regarding the political discussions in Iberia that might impact your business. So first in Spain, about the discussion on the law to revise the marginal pricing system. What is your expectation about the outcome of this regulatory proposal and also the level of output that you expect to be impacted for EDP? And the second is on Portugal. There are political discussions about the possibility to pay a stamp duty for the sale of the hydro assets. Do you expect to book any provision for the possible risk? So this was the first question. The second question, it was on Energy Management. So maybe just given that the expected higher CO2 prices that should be supported by the Fit for 55 package, would you expect to take the opportunity to increase merchant exposure in terms of generation? Or you speak to your strategy to bid as much as possible long term contracted? And the final question, highlighted the significant level of investments expected in The U. S. Also to improve the network. Would you consider to enter in this market as well? Hi, Sara. In relation to Spain, I can then ask Rui to comment a little bit more on the marginal pricing system, but we certainly don't see anything on that front. I think the key issue that's really under discussion in Spain, which for us has a more residual impact, is on, let's say, the CO2 clawback value. And that's a specific proposal, which has being discussed, and I think that's public. The impact for EEP itself is relatively limited. In terms of Portugal and the stamp duty, so this has had some media attention over the last couple of months. We intend to have a provision on this. This was a very textbook standard plain vanilla transaction with a demerger and sale of a company to Anji, fully supported by all of the legal advisers and financial advisers. So something that was thoroughly scrutinized. We've been fully collaborative and will continue to be fully collaborative on providing all information regarding this so that we can clarify this as quickly as possible. In relation to your second question on energy management and the higher CO2 prices, would we increase merchant exposure? Listen, I think we've always taken an approach that what we aim to do, and I think that's one of the fundamental values of EDP and utilities, is to have predictable, stable, long term cash flows. And so what we look for is to lock in either through PPAs, feed in tariffs, CFDs, these long term cash flows. And it's what I think has given us the stability over time. So the same way we've seen the volatility in the market, we saw it last year, prices crashing, we see them going up this year. I think what we like is this predictability. And so I wouldn't see us increasing merchant exposure. I would expect us to keep the same philosophy in terms of contracting of new renewable projects sort of on these terms. I mean, obviously, we go on hedging for what we do have merchants. So whether it's hydro or any renewables, which does have merchant exposure, we typically forward hedge and Rui has already spoken a little bit about that. But I wouldn't expect these prices to necessarily change philosophically our attitude to this. In relation to your third question, and it's a great question, U. S. Investment, so we are investing heavily in The U. S. In general, mostly in renewables, wind, solar, looking at storage, looking at hydrogen networks. I think the key issue for renewal or relating to renewables is on the transmission side. And we've looked at this in the past. It's not something which we expect to go into in the short term. But we are certainly willing to work with partners who are developing these transmission lines, because typically, there's a lot The U. Has fantastic resources in both wind and solar. Sometimes, let's say that those projects are then not located close to load centers. And so it's important to have the networks to be able to connect, let's say, the demand and the supply in The U. S. And so I think this package of 73,000,000,000 which has been earmarked for investment in networks, I think it's positive in that sense. So going back to your first question about Spain. I think, first of all, changes in the marginal market is something that or rethinking the market architecture is something that EDP has pushed for many years now. We believe that the more you have this zero marginal cost technologies as renewables penetrating the systems, the more it is important to rethink this market architecture. It has to be done at the European level. So I think it's going to be very hard that any country can progress alone in changing these the market rules without a consensus or a support from European Union. So I will not be very I'm not very, I would say, optimistic that we would see some structural changes in the market. And as Miguel said, I mean, what we are expecting now is for this CO2 callback to see how it will ultimately unfold. From what we have heard, that could be the changes that were incorporated after the reports from the Spanish regulators and CNMC, this potentially would impact EDP's net profit at low 10s of millions. EDPR should be very low, very low single digits. So it would not be material. Nevertheless, it's something that from a conceptual perspective, we don't see it going in the same direction as it is for '55. So I would expect still some discussions to go on in Spain about this subject. Very clear. Many thanks. Thank you, Sarah. We can go to the next question, please. Our next question comes from Javier Guerrero of JPMorgan. Javier, your line is now open. Yes. Good afternoon, everyone. Thanks for taking my presentation. Two blocks of questions, if I may. The first block is on guidance. I would like to understand, firstly, what you are including in your net debt guidance, if you are including any proceeds from any disposal outside the asset rotations in renewables, specifically you are including any proceeds from asset rotations in transmission in Brazil or the sale of Brazilian generation assets? And then on the guidance on EBITDA and net income, if you are including any asset rotation gains from transmission in Brazil? That will be the first block. And then second group of questions would be on renewables. You have delivered three twenty basis points spread of AWAC in the 6.7 gigawatts that you have already secured, but that includes assets that you retain and that says that you are selling in your asset rotation study. If I am correct, is there any meaningful discrepancy in that spread in between the assets you keep and the assets you have agreed to sell? And the second question on renewables is how are you seeing your discussions on PPAs with regards to the passing through of incremental costs because you have been very clear about how protected you are for the portion of capacity that is already secure, but the new PPAs would need to include that pass through. How are those conversations going on? Javier, so it's Rui here. So let me address the guidance, and then I'll hand over to Miguel for the other two. So starting with the net debt. So for the net debt, what we are considering is bearing in mind that we will have already the asset rotation, which is already signed. In July, we closed, I think it was about three, four days ago, $650,000,000 from tax equity. So we that is closed in our accounts in July. Regulatory receivables, so we did a $500,000,000 sale of the tariff deficit already in July. We may do some more towards the end of the year. And naturally, we are expecting a normalization of working capital because as you know, we had during the first half, particularly the first quarter, we had some anticipation to suppliers just to manage the liquidity position. So that's we are seeing that's how we are seeing this evolving to around the €11,000,000,011,500,000,000 by the year end. And yes, I mean, what concerns the our estimates for the year end at the EBITDA level, we are considering that we will be closing asset rotation. And then that includes the TPPR and also the Brazilian transmission. Although I have to say it's a very small contribution from the Brazilian transmission. Miguel, do want to address your question? Yes. So in relation to your questions on renewables, so it's roughly the same. I mean, we are crystallizing the fair value of the assets upfront. And we don't differentiate necessarily between what we retain versus what we sell. That decision is taken much more on the criteria in terms of, is there sufficient critical mass, are there geographies that we think are interesting for investors to come in. So that's the key criteria and not so much whether there's a difference in terms of the returns from one to the other. So I would say it's the same between both. On the PPAs and the pass through costs, I mean, I think we flagged that in one of the think in the EPR presentation that the pass through of these costs can translate into something like EUR1 to EUR2 per megawatt hour of delta. So it's not extremely well, it's not material at all in the context of the PPAs when you're discussing €30 €40 or dollars per megawatt hour. So the discussions that we said that I've witnessed have been fairly standard because obviously this is something that is sector wide, so it's not company specific. And if it's a new process, then the bids just go in already reflecting these costs. If it's an ongoing process, typically, it's a revision upwards, but which is understandable given the overall context. So what I can say is it's not something that we see a lot of resistance because it ends up not being that material in the overall context. Right. Thank you very much. We can go to the next question, please. Our next question comes from Alberto Gandolfi of Goldman Sachs. Alberto, your line is now open. Thank you for taking my question and good afternoon. I have three, please. Two are clarifications. Can I just be clear about the Energy Management EBITDA? I think, Rui, you said the €75,000,000 negative impact, which is offset at the hydro level. Then you talked about negative sourcing of €50,000,000 Maybe didn't get it, but was I mistaken, you didn't provide a mark to market impact. Now should we say that the total Energy Management is about €200,000,000 plus, partially offset by €75,000,000 in hydro? Or is the impact even bigger? And would you expect some of this to normalize by year end? So you're going to use some gas in the second half. That's what I'm asking. Second question is, forgive me again on guidance. You talked about market, I mean, adjusted €3,700,000,000 EBITDA recurring above €800,000,000 Could you tell us if you really are put I mean, if you're comfortable providing more than €300,000,000 gains or at €300,000,000 gains? Because at €300,000,000 gains, the underlying net income before gains would be about $650,000,000 So I'm trying to figure that out. And sticking to guidance, so I guess that question 2b. For 2022, we should have a bounce in volumes in renewables, in particular, new capacity load factors. You don't have losses in Texas, some power price tailwind, the energy management. So before any asset rotation gains or assuming constant gain, shouldn't 2022 be a particularly strong year for you, both operating and bottom line? And last, I promise, yesterday, I asked a question about asset rotation. You're making like 2x invested capital. So I guess what I asked yesterday was, why don't you sell fewer gigawatts, get the same euro amount inflow and retain more assets? But thinking about it, why don't you actually sell the same gigawatt, make these above expectation gains, but at the same time, use the higher proceeds to upgrade the capacity? So are we going to be here in February next year where you're just going to keep the same gigawatt disposals and then suddenly maybe achieve your six gigawatt growth sooner than expected or go even above that? You. Albert, so I'll take the first one. So it's Energy Management, just to be clear. So yes, we see a negative impact of €75,000,000 but it's a positive impact on the hydro, and that has much part to do with the realized price. Then we have around €50,000,000 which is higher cost of sourcing to supply to our supply business. And therefore, we the energy management takes a higher source of costing sorry, a higher cost of sourcing. But then this is not reflected in the price to the customers. And then there is a third one, which is a negative mark to market of €50,000,000 on a gas some gas hedges that we have. Again, just because we hedge and once we utilize the gas, we will benefit from that spread. But it was considered to be a speculative contract. And in that regard, it's mark to market against TTF increasing. So that's a negative impact that will be we will be unwinding it as we utilize Those were the three blocks that have a, I would say, significant impact in terms of the energy management. Alberto, yes. So in terms of the guidance, final strategic question, so would we guide towards more than 300,000,000 I mean, the answer is yes. I think and this is something I would just like to make sure it's clear. So we have several transactions that have been signed and that we are working through the regulatory approvals, some in The U. S, some in Europe. We've talked about the one in Portugal, but there's another one upcoming. And so it's essentially a question of, let's say, of managing also the timing of these and whether all of these crystallize in 2021 or whether some of these also crystallize in 2022. In almost any scenario we look at, we are very comfortable with more than the €300,000,000 The exact value will then depend on exactly which deals close in 2021 versus others that may close in 2022. So that's what I would say on this. In relation to the second part of your question, I think you are absolutely right. We I mean, quite frankly, we had a poor first half on an operational basis in terms of the volumes of renewables, particularly in The U. S. Europe and Brazil was fine, but The U. S. Was clearly low volume, not just because of Texas event. Mean, that was a one off, but we also had just generally low wind. If we normalize that, we would expect certainly more volume on renewables overall. So operationally, we would expect that to bounce back in 2022, assuming an average year. In terms of asset rotations and going to your third question, I think clearly, stated goal was the €8,000,000,000 of asset rotation. And so if we sell, let's say, if we get those proceeds with less megawatts, then that's fine. I mean, we'll have ticked that box in terms of we'll have met the criteria that we needed to in terms of our balance sheet. I think we'll then be in a position where we decide, as you said, do we sell additional megawatts and reinvest or do we keep it there and keep more megawatts on balance sheet. And I think that will depend very much on how we see the market in terms of our ability to continue to scale up, the type of projects, the returns we see on those projects. So we will come to that point, I'm sure, and we will have to take a decision on that. As of today, all I can say is or what I would say is that the target is the €8,000,000,000 If we do it with less megawatts, that's great. And then we'll be in a position to decide whether we do more megawatts and keep them on balance sheet or not. But that's something that we will evaluate. Hopefully, that answers your question. Yes, it does. It's a good problem to have. Thank you. Yes, exactly. Can I go to the next one, please? Our next question comes from Jorge Guimaraes of JB Capital. Jorge, your line is now open. Good afternoon. I have two questions, please. The first one is a clarification on the guidance because I had a problem on my side on communications. I did not understand whether the guidance included asset rotation gains in Brazil. So a clarification on our previous answer to this. The second one, it's still on the energy management. According to the guidance that or the consensus that you circulate in the current currently, the market is expecting something below €400,000,000 per year over the next years. Are you comfortable with that value for the division? And the final one is a bit more conceptual. When do you expect that we have cross border PPAs in Europe that will allow for the export of cheap solar PV from Iberia to Europe? These will be my three questions. So addressing the maybe the first and second Yes. So the first, yes, we are including in the guidance some capital gains from the Brazilian asset rotation. But again, I mean, those are relatively small. So I mean, not significant really not as compared to the ones that we have from EDPR. On the Energy Management, yes, I mean, we are not providing sort of guidance for that for the medium term. But I would say that for this year, we expect that by year end, we would have a contribution from this segment, Client Solutions and Energy Management, around billion. Going forward, million ballpark figure should be relatively fair to say that it's although we don't as I said, we are not commenting on specific guidance, but ballpark figure, yes. Okay. George, if I understood your question, the third one was, will we see PPAs in Iberia ramping up Iberia exporting solar to the rest of Europe? Was that Yes. When do yes, yes, yes, when can we have cross border PPAs that can to allow export of electricity to other European countries? Yes. Well, in general, what I would say is that the PPA market that we've seen in Iberia has been picking up. So as you know, in The U. S, it's very mature. It's something we've been doing for many years in Europe in general, and Iberia in particular, been less so in the past, but we do see it picking up. And in fact, we've already signed a couple of corporate PPAs with European companies that aren't necessarily in Iberia. I think the Fit for '55 also shows support for growing PPA market in Europe. And so I think that's also something that's positive for the overall market. I didn't if in your question, if it was implicit that we would be exporting solar to the rest of Europe, like physically, that I think is very much dependent on interconnection, which as you know, is something which between Iberia and the rest of Europe is still not great. In fact, we just recently had last weekend, as you know, sort of this incident on the network. So it just shows us, I think, sometimes the limited amount of interconnection between Iberia and France, which is expected to increase over this next decade. So I think with time, you could then start getting more physical or a higher percentage of physical exportation of solar through these PPAs. For the moment, these end up being the people who contract PPAs either in Iberia or then they hire they contract them, but they don't physically have sort of, let's say, require the energy in the other European market. We can go to the next question, please. Our next question comes from Fernando Garcia of RBC Capital Markets. Fernando, your line is now open. Hi, good afternoon. Thank you for taking my questions. My I have two questions on gas. One, I think that you are loaning customer versus gas contracts after the expiration of €1,500,000,000 of gas contracts this year. So could you explain what is your strategy in gas? And have you hedged all your gas sales that you expect for the second half of the year? And second question, if you can provide some clarification on this €50,000,000 mark to market of negative gas impact in Q2 actually. And taking into account that TTF gas prices went up still in the at least in July, taking into account the gas usage that you expect for H2. What could we expect regarding this favor in the second half of the year? Fernando, it's Rui here. So just first of all, in terms of the hedging strategy for the gas contracts, it follows the same hedging strategies or risk policy that we have at EDP. So we always aim to have it balanced so that we don't have very open positions. Again, it is small activity for EDP. Nevertheless, long term contracts hedged for this year, I mean, are hedged. Twothree of the gas volumes are also hedged for 2022. And of course, I mean, we always manage what is the best destiny for the gas, whether it is to the plant or to the customer base that we have in Iberia. In what concerns the mark to market, just to be clear, So in these contracts that we have that are going some of these contracts will be for supply or to be utilized or to consume the gas in Q3, Q4, throughout 2022, we hedge it. So once we hedge it, we close the spread. And basically, this particular mark to market, so we locked in a spread TTF versus Henry Hub because TTF is where we will the reference price upon which then we sell the gas and the acquisition was the Herring Hub Index. So once it's locked in that spread, it means that when I'm utilizing the gas, I know exactly what the price I will be utilizing or what cost I will be utilizing that gas in TTF. What happened, as you said, is that TTF market went up. So it was considered that this the volumes that were hedged with this spread on a mark to market basis. So TTF went up. The TTF at which we locked in was lower. And therefore, that delta, we had to book it as a mark to market. So that's where the negative impact comes. So it's that mark to market. So it's not a cash out. It's the impact on the accounts. What will happen as we go forward and we utilize that cash in Q3, Q4 and in 2022, basically, we'll be unwinding this mark to market or effectively what we'll be using is that spread. I mean, that was already locked in from an economic perspective. But it's what this is what we have in the books in this quarter. Thank you. Very clear. We'll to the next question, please. Our next question comes from Arthur Sitbon of Morgan Stanley. Arthur, your line is now open. Thank you. Thank you for taking my question. I have two. My first question is, I was wondering if you could please provide an update on the investigation into your fiscal obligations regarding the sale of the Portuguese hydro dam to ENGIE. If you could provide a sense of what's really at risk here that would be helpful. And my second question is just if we could get an update on if there is any progress being made for the auction of municipal concession on Portuguese electricity distribution. Thank you very much. Hi, Arthur. So in relation to the first one, there's not really any update. So there's an ongoing investigation in relation what's come out in the media is in relation to the stamp tax, which has been led by local movement to be of around EUR100 million. And as I mentioned earlier on the call, so this is something which has been seen and reviewed many, many times by both legal, financial, tax advisers, and we're very comfortable with the position we have. So it's something that, as I said, we are collaborating fully and hope to clarify as quickly as possible. In relation to the auction on the low voltage concessions, I think that's what you're referring to. So there's a working group that was put together a few months ago to come up with a proposal for how to run this process. We would expect that to that proposal from the working group to come out probably over the next couple of weeks even. And it would probably be followed by public discussions. And essentially, it would only be following those public discussions that there would be actually a decision taken on what to do in relation to the low voltage. I think just it's always good to reiterate that, as you know, this represents about €1,200,000,000 of RAB. And that in terms of, let's say, we are continuing to manage it on an ongoing sort of business as usual basis. In any scenario, we would get either ramp back, so that's under the concession contract Or if we were to win this process, depending on what it is, it would be under the terms for another concession period. So that's essentially what would happen. The process itself, there's not much visibility on whether it's going to be one region or more than one region in exactly what terms. So I can't comment much more than that. You. Go to the last question by phone. And today's last question over the telephone lines is from Ollie Jeffrey of Deutsche Bank. Ollie, your line is now open. Thank you. Good afternoon. I have two questions, please. The first one is on the ESCO integration. I just wanted to get a sense of how you saw the integration going in terms of the synergies you expect. And just specifically on if you're getting more confident on the synergies since the Capital Markets Day in February, have you found more, for example, you think you'll be able to exploit or be able to generate than you initially envisaged? That's the first question. And the second one is on the Schemax gain. So you mentioned that the gains recorded on the transaction that's completed at €250,000 a megawatt. That's an onshore wind asset, obviously, and you guided €200,000 a megawatt over the plan. I just wanted to get a sense of, is that 250,000 a megawatt, although it's above 200,000 guided, I believe the 200,000 a megawatt that's guided is a mixture of wind and solar with the wind assets probably having a higher €1 per megawatt gain expectation. So is the 250,000 a megawatt in line with what you expect for onshore wind? Or is it still higher than what you're expecting for onshore wind only? Thanks, Oli, for the questions. So in relation to the first part, in relation to Viejo, I think that, quite frankly, we're positively surprised not surprised, but happy about the way that the integration is going. It's certainly on good track, even slightly exceeding the pre closing assumptions. It's already we've defined already the new organizational model already back in March. We have several initiatives on track in terms to maximize the value creation. As I mentioned earlier, we got the collective labor agreement closed now in the 2021, which was important precondition to implementing, let's say, the restructuring. So 2021 is a transition period where we are expecting to be implementing the bulk of the, let's say, the synergies and the initiatives and that we would get the like those benefits from integration in 2022 onwards. We haven't quantified the Viego synergies explicitly. But overall, what I would say is that they're in line with those estimated by analysts. So in terms of operational synergies, sort of around the €20,000,000 per year plus and then also some tax synergies, which we've talked about or which analysts have talked about, which could take the overall number up to forty, fifty per year. On the second part of the question, so we expect higher gains. I mean, yes, wind does typically have higher gains per megawatt than for solar. And so that's built into the assumption. So when we talk about the 200,000 per megawatt, That's essentially what includes both wind and solar. However, this one, the two fifty, it came above what we had in the business plan for wind specifically. So let's say, comparison of the two fifty is still above what we had estimated in the business plan. We are a little bit investing time, but we still have time for a couple of questions from the web. The first question will be on the draw in Brazil. So what do you expect the impact of the draw in Brazil on your second half twenty twenty one results would be from Mamador from Bloomberg. So I would just say that in terms of the current situation in Brazil, we are going through a worse rainy season over the last ninety years. Nevertheless, I think the hedging of EDP Brasil that was placed in the beginning of the year and the end of last year protects us from the current GFCF levels that we see in the region of 76%. And so we don't expect any material impact in the results of 2021. Obviously, on a quarterly basis, there can be some inter quarter volatility. And definitely, the third quarter is a more challenging quarter where we see GSF in the region of 50% to 60%, but at the end of the year, so we will be in line with what was our expectation at the beginning of the year. We have another question also from the web from Stefano Bezzato. Is there any specific to the asset in the last farm down announced in Portugal in order to justify the higher than average multiple of €2,400,000 per megawatt? Can you give any indication on the capital gains? Sorry, Stefano. So in relation to your question, I mean, what I'd say is we've definitely seen a lot of appetite for these assets overall. I mean, even last year in Spain, for example, in the Spanish transaction, it was also a fantastic multiple. So these multiples are obviously influenced by the good quality of assets. Number one, very low cost of capital in Europe with very low European interest rate environment. That's the second one. Third, I'd say, the average age of the portfolio. So these are fairly new assets, in fact, just finished being built or are being building. And then they have fifteen years of strong contracted cash yield. So I'd say that's the fourth point. So you put all of these together, and I think you come up with these type of multiples that people are willing to pay for. We haven't provided and we won't provide the exact capital gain at this stage. We always need to wait for the final closing so that we can calculate exactly the capital gain, and then that's disclosed in the quarter the quarterly reporting following the close the financial closing. So in any case, I think you guys have or somebody who's done the math using CapEx estimates for the different projects, and I'm sure you'll be able to come up with a good estimate. Okay. So we are a little bit long in time, so we'll finish here and we'll follow-up on some few other questions that we have still on the web. And I will leave now to Miguel Stuell to some closing remarks on the call. What I'd say is I think we had a quarter which was had some ups and downs. And clearly, we recognize that in terms of the downs in terms of energy management and the weaker volume. But I think at the same time, showing the value of some of the diversification, namely on the network side, on the efficiency side. And so we feel comfortable with where we are. We feel comfortable with the guidance that's come out in the market. Thinking more medium, long term, we feel very excited and very comfortable with the overall growth perspective, certainly in the renewables business, but also the other parts, both client solutions and also in the network. So I think that generally we feel positive about the sector and about the company. And that's something which we'll be working on now over the next couple of months to make sure we deliver the results this year, but also for future years. And I think that's it. I mean, my side, just wish you all good holidays, July 30, and I'm sure many of you will be off probably for the next couple of weeks. So take care, stay safe, enjoy and we'll, I guess, talk again early September. Thanks a lot. Ladies and gentlemen, this concludes today's call. You may now disconnect.