Earnings Call: H1 2018

Jul 27, 2018

Thank you for standing by, and welcome to the EDP Conference Call of Results Second Quarter twenty eighteen. At this time, all participants are in a listen only mode. If you wish to ask questions today, you will need to submit them via the webcast using the question box on the right of your screen. I must advise this conference is being recorded today on Friday, 07/27/2018. I would now like to introduce and hand the conference over to your speaker today, Antonio Machia. Please go ahead, sir. Hi. Good morning, ladies and gentlemen. First of all, thanks for being with us today in this conference call for the presentation of EDP's twenty eighteen first half results. As usual, we will begin with a presentation providing an overview of the results and then the main developments of the first half of the year. Afterwards, we'll move to the Q and A section. Our CEO, Antonio Shier and our CFO, Miguel Turo, will be available to answer your questions. We'd like to advise you at this time, we are taking questions to be at the VED web, so please ask your questions only through our webpage, www.edp.com. Expect this call to last no more than sixty minutes. Now I'll give the floor to our CEO, Doreen Shier, who will give us an update on the main highlights of the period. So good morning, everybody. I've just heard, as usual, our IR, Miguel Viana, introducing. First of all, thank you very much for participating in the results conference call. I would like to start by highlighting our good performance in the second quarter. It was mainly driven by the stronger than expected hydro volumes in Iberia and continuing strong performance in local currency in Brazil. As a result, the first half of our recurring EBITDA in the first half of the year, excluding ForEx, rose by 3% year on year, reflecting, as I mentioned, strong underlying growth in Brazil and also in renewals. The 6% negative impact from ForEx, resulting essentially from the Brazilian real and U. S. Dollar depreciation versus euro in the period, imply that our recurring EBITDA showed a 3% decline to €1,740,000 in the first half. Also on the positive side, we have a strong year on year recovery of hydro production in Iberia versus a very dry first half in 2017 and the positive year on year performance on operating costs. And finally, we need to highlight the adverse regulatory changes announced in the second quarter in the last quarter last year, which represented a negative impact of 122,000,000 year on year. Net profit stood at EUR $380,000,000, with the recurring net profit increasing by 5%. We had a good performance on interest costs, following the decline on cost of debt by 40 basis points to 3.7 and the double digit growth in Watsons from EPS contribution from Brazil and EDPRunumo, while net profit in Iberia remained flat. Finally, we show the EUR 14,200,000,000.0 net debt by June, which represents a 16% decline in our EBITDA, with adjusted net debt to EBITDA ratio down from 4.4 to 4.5 times at the June this year. This includes the impact from EUR 600,000,000 of net expansion CapEx, in which 93% was allocated to renewable and the 700,000,000 annual dividend paid to our shareholders last night. So moving into recurring EBITDA on Slide two, going into the details. So recurring EBITDA was sustained by the underlying growth in Brazil, as I mentioned, also in renewables and hydro improvement despite the adverse ForEx and regulatory changes in Portugal. As you can see and we mentioned excluding ForEx, our recurring EBITDA went up by 3%. Going item by item. In Brazil, EBITDA in local currency grew 17%, propelled by the integrated hedging strategy in Energy Markets, lower losses from Greece and higher availability in generation, namely in Tessar. In Renewables, EBITDA ex ForEx went up 1% year on year, reflecting percent increase on average installed capacity, but also lower wind resources in second quarter twenty eighteen, 8% below the long term average. Finally, in Iberia, recurring EBITDA fell slightly by 1% as the 85% growth of hydro production was mitigated by the EUR 44,000,000 increase of taxes and generation and the EUR 78,000,000 decline of regulated revenues and distribution that was already known. Moving into Slide three, we see hydro resources in Portugal that changed a lot in this first half. The first half, we have a significant improvement of hydro, which were 15% above the historical average, being particularly strong in March and April. This compares to an extremely dry first half, as I mentioned. But I would like to note that a significant part of this improvement over the resources was allocated to refill hydro reservoirs instead of being used on electricity production. Hydro reservoir storage increased by one terawatt hours in the first half of the year, significantly more than what is normal for this time of the year as a result of a very low reservoirs at the beginning of the semester and reservoirs clearly now above average by the June. So my figures, if you end if you start at the beginning of the year, you would be EUR 13,000,000 below negative, and now we are EUR 50,000,000 above, so we have recovered by this at least EUR 50,000,000. Slide four, slight performance on operating costs. I think it the need always to stress this, and clearly, the figures are very strong. In Iberia, OpEx fell by 2% in nominal terms and almost 3% in real terms, particularly remarkable as we regard a 2% increase in average capacity installed and a large portfolio of customers. In Brazil, OpEx in local currency decreased 1% in nominal terms or more than 4% in real terms, as the number of inflation stood at 2%. A noticeable performance on the back of several cost cutting initiatives, namely the third year in a row of a zero base budget. At EDPR, core OpEx per megawatt improved by 1%, which includes the positive foreign exchange impact. If adjusted, it was 2% higher, reflecting the buildup of O and M in the realization strategy that will allow us to get further efficiency improvement. Moving to net profit. It increased 5%, benefiting from double digit growth contribution from EDPR and Brazil. Renewables contribution grew 10%, combining the impact from increase on our equity stake to 82.6% and EDPR net profit growth of 4%. The contribution of Brazil to EDP net profit increased by 32% in euro terms, following EDP Brazil 59% increase in net profit in local currency. In Iberia, recurring net profit fell by 1% as the positive impact from hydro recovery was offset by the adverse regulatory changes in Portugal. At this level, I would like to note that the weight of Portuguese operation, the commercial operations in Portugal, our reported net profit went down from 31% in the 2017 to twenty two percent in the 2019. So basically, we are more and more out of Portugal in terms of results. Slide six, growth. We continue to focus on execution of our organic growth focus on long term contracts, renewables and on regulated networks in Brazil. In renewables, we have currently secured 3.3 gigas of PPA and premium tariffs for the new wind and solar capacity to be commissioned over the next years. 2.9 gigas of these long term contracts secured our reference to new wind offshore and solar projects spread between U. S, Canada, Brazil and European Union, of which EUR 1.2 were secured since the beginning of the year with a strong participation of the new PPAs in U. S. Of all these projects, we are currently EUR 1,100,000.0 in construction stage. On the other hand, 900 megawatts are referring to our current equity stakes in the three wind offshore projects, one in UK, Moray East and two in France, which are already secured a contract for differences and PDMFELD, respectively. As you know, agreeing on these impairments, I think it's a very important result. Moving to Brazil. We have five greenfield projects for the transmission lines to be built until 2021 and 2022, which represents an expected investment of 3,000,000,000 or more or less EUR 700,000,000, and that are expected to provide a return on equity in the range of 12% to 14%. The licensing and construction process is moving ahead of schedule. With the first line that we have started to build, the one that was awarded in 2016, already seventeen months ahead of schedule and with almost 50% of construction work already concluded. So I think very the funding is very, very well. On Slide seven, guidance. What we have said in the time of the presentation of the first quarter results today, we are now slightly more positive on generation and supply, given the recent good performance of hydro generation and despite a very difficult environment for thermal generation and the supply business, which continues to face significant pressure on that. On the other hand, the recent devaluation of Brazilian real may erode the performance in Europe in terms of the Brazilian operations. So overall, we have no reason to change our 2019 guidance, and we reiterate our expectation of EBITDA in the region of 3,400,000,000.0 and net profit around EUR 800,000,000, fully in line with what we said in the first quarter presentation. Moving for the debt that is on Slide nine. As you know, we had a period of stronger regulatory restriction regarding what we can comment with the market on everything that is somehow related to the preliminary offer presented by CTG on May 11. Even so, I would like to take this opportunity to summarize what EDP Executive Board of Directors stated in our report and only this, which was released to the market the June 9. I remind you that for a more detailed analysis, and I'm sure that you have already visited, you can find a full 91 pages report at the website. Cmdet. First of all, the report concludes that the price offer does not adequately reflect the value EDP and that the implied offer premium is low considering for customary valuation methodologies, intensely exposing the report. And on the other hand, EDP Executive Board of Directors consider that there are many industries in case of the office. Although given the uncertainty, we will seek more information about CTG and probably the STPG in order to be in a position to form a more considered view. Such an update, we have been working on this front, and we will share information with you in the appropriate time. So yes, we are doing exactly what was mentioned in the report. Slide 10. In terms of the potential implication of the strategic intention of CPE for EDP, I would start to refer the significant amount of regulatory approvals in several countries where EDP operates to which the offer is commissioned. And among these, we highlight in the report the current soft securities in The U. And so we need to be working on this front to understand more of this and that the transaction, the management noted already that this is the main where everything needs to be clarified. And also in what concerns the contribution of potential assets of CTG in overlapping markets, namely in Brazil, the offshore in Germany and also stake minority stakes in EDPR projects in Portugal. So at this stage, EDP management perceived that this intention could be positive and represents the relevant value creation alternatives benefiting all the shareholders if executed an appropriate corporate governance also in relation with related parties. So we stated in the report that the framework agreement conditional to CTG, obtaining control of EDP, containing full financial economic details of certain provisions should ideally be presented to shareholders before them having to decide on tendering their shares. Regarding CTG intention to favor the engines of EDP into China's offshore market, We are analyzing this, and of course, we will try to understand if this potential platform makes sense and it will enhance our control. In Slide 11, finally, we would like to stress this. CTG presents the intention of preserving the autonomous decision making based on highest international corporate governance standards. The intention to reinforce EDP financial profile by committing to maintain the leverage reduction to 350,000 level and ensure at least an investment grade rating. At the same time, aiming to retain flexibility to pursue growth and to maintain a stable dividend payout policy with dividend payout not below what has been disclosed by the year. In our view, the merits of this described redemption depend on their implementation model, which is, of course, not clear at this stage, naturally. So the Executive Board believes that the scope of Residential Framework Agreement should be also extended to the other relevant commitments presented, namely identity, corporate governance to ensure proper minority protection, financial strategy and stable dividend policy as we mentioned earlier. The extended framework would allow the required visibility for investment decision prior to the operating registration, potential submission and all into the acquisition of Control of EDP Energia. With this, I conclude the summary of the contents of EDP Executive Board of Directors, noting that the report contains all the considerations that we can share with you in the subject of this stage. And now I will pass to Miguel Silho for more detailed analysis, and I will go back to come back to the Q and A. Thank you. Good morning, everyone. I'll now move back to the first half results and walk you through some of the additional slides. So if we move to Slide 13, Essentially, what we have is that the focus continues to be on the renewable energy, having added approximately 600 megawatts of additional solar wind capacity. So with this, the renewable energy has now reached a rate of 74% of the group's installed capacity and 71% of electricity production. I'd like to highlight that the increase in hydro production of this first half and particularly the second quarter of around 72% year on year, 85% in Iberia, is due to the strong recovery of hydro conditions. But essentially, we see this continuous growth in renewable generation as we move forward. Moving on to Slide 14. Here, we see that the EBITDA of EDPR decreased 5% year on year to around EUR686 million. This is the result of several different variables. On one hand, EDPR average portfolio expense by around 7%. However, benefits from this expansion are reduced by the negative impact from ForEx of around minus 6%. There's also a 6% decrease in the average selling price, excluding ForEx, both in The U. S, Poland and Romania. And also the termination of some ten year old PTCs in The U. S, which led to a 15% decrease in the PTC revenues, which you can see here, we have highlighted on Slide 14. The wind resource across geographies was approximately 1% below the P50 scenario in first half and mostly or entirely in the second quarter when the wind resources fell 8% short of average. So we've had a strong hydro production on one hand in terms of wind resources slightly below average. So all in all, in relation to EDPR and excluding the ForEx, the EBITDA was up 1% year on year. Moving on to Slide 15. Here, excluding the 2017 share of Lower Connect, the final adjustment EBITDA increased by 26% to EUR155 million, boosted by a 58% year on year increase in the 2018. So this is relation to generation supply Iberia. So this growth is fueled by, as I mentioned, the 85% increase in the hydro production, so around 8.7 terawatt hours in the first half, which accounted for approximately 50% of EDP on production and which also resulted in a decrease in the average sourcing cost, which can also be seen here. The average production cost falls to EUR22 per megawatt hour. So having said all this, the performance in the generation supply ended up, although capped, limited by the increase of regulatory costs, which was up 22%, Antonio has already talked about that, And in the end, also the Connect Aviation revenues, which were still in place in the 2017. Moving on to Slide 16 and our operations in Brazil. So as mentioned, they had a strong performance. EBITDA in local currency increased by 17% to billion approximately, mostly due to efficiency improvements and also to the well managed successful integrated hedging strategy in the energy market. Regarding efficiency gains, I'd just like to stress the reduction in the nontechnical losses in the low voltage segment with around 30,000,000 impact in results and also the increase in six percentage points to 98% of availability of the same, our coal power plant. That's also highlighted here on Slide 16. Finally, I think it's worth noting that management successful management of regulatory agenda resulted in a reduction of penalties for unavailability linked to Sustained in the second quarter. So that has also helped increase the results, which essentially, if you look here from Sustained, moved from around BRL200 million to BRL300 million in the first half. Moving on to regulated networks in Iberia, Slide 17. So excluding the gas distribution networks, which were sold last year, EBITDA from regulated energy networks fell 23% year on year to approximately €314,000,000 This decrease reflects mainly the performance in Portugal and represents 78% of EBITDA in the segment. So the OpEx performance in Portugal was very good, improving 5% year on year despite the 5% growth in volumes distributed. But this was obviously not enough to compensate the impact from the regulatory review in Portugal, which justified a 13% decrease on the regulated revenues. Additionally, the EBITDA from our electricity distribution activity in Spain amounted to EUR 70,000,000, reflecting, if you want, a prudent accounting approach to possible regulatory change in the asset base, what we call the lessee visas. So that's something we've talked about in previous calls, and so that's already incorporated. In relation to net debt, moving on to Slide 18. So this stood at €14,200,000,000 in June, at the June, with recurring organic cash flow of around 600,000,000 expansion CapEx also of around €600,000,000 Just in terms of this expansion CapEx, important to note, this includes the construction of the new wind capacity, investments in Salesque in Brazil and also the sales of 20% stake in the Moire offshore wind projects in Scotland. So additionally, the net debt was also impacted by the EUR 400,000,000 reduction regulatory receivables during the period, resulting from the sale of the tariff deficits and the securitization and also the good performance of electricity system debt, which also had a EUR300 million reduction in the period. So as a result, the stock of debt in the electricity system reached EUR 4,300,000,000.0 as of the June, benefiting from the demand growth in Portugal and fast cost cuts. I think this is a good sign of the continued reduction in the debt in the system over time. Overall, so we also paid our dividend, obviously, in May of around EUR 700,000,000. And overall, the net debt to recurring EBITDA is approximately 4x as of the June. So just a comment also on Slide 19 around net debt issues and liquidity. So the total available liquidity is around EUR 6,700,000,000.0, including EUR 1,600,000,000.0 of cash and equivalents and EUR 5,100,000,000.0 of available credit lines. So this covers our refinancing needs beyond 2020, so that puts us in a comfortable position. I think I would particularly like to highlight our bond issue in June of €750,000,000 with a yield of around 1.67. I think this is a successful issue taking advantage of a very specific window in the market. This bond matures in January 2026. And also the securitization of €100,000,000 between sales and securitization of €900,000,000 of electricity tariff deficit in Portugal over the first half. So again, I think also important to show that we can continue to successfully place the system better in the market. Moving on to Slide 20. So here, we have a 15% decline in the net interest cost to 51,000,000, around EUR 51,000,000, just consistent with the trend of the last quarter. So clearly, this graph on the left hand side, you can see consistently every semester reduction in the net interest cost. So this decrease was prompted, on one hand, by a 40 basis points lower cost of debt and also by, obviously, lower average debt year on year. Moving on to Slide 21. So 25% decline in net financial costs, backed by the lower interest costs, which I just mentioned, and also a positive ForEx impact. So there was a decrease in the net interest cost of 15% to EUR 51,000,000. I've already mentioned that in the previous slide. There was also a positive impact of EUR 31,000,000 from results of ForEx and derivatives, which are essentially tied to the energy contracts. Finally, just to mention in the others, a €50,000,000 gain on the sale of the 10% stake in The U. K. Wind offshore project, which is part of our recurring sell down strategy. And the €50,000,000 from Badgrull related with the acquisition of Celeste, which has also been disclosed in the Brazil call. Finally, moving on to Slide 22. Net profit, $380,000,000 reported net profit, a EUR 12,000,000 decrease year on year, excluding the gas operations in Iberia and largely justified by the EUR 66,000,000 year on year decrease in EBITDA. However, financial results and associates have a positive evolution, in other words, a decrease of around €76,000,000 due to lower interest costs and a positive impact of ForEx and energy derivatives. Income taxes, 19,000,000 higher due to an increase in the effective tax rate from 15% to 16%, but still below the guidance that we provided in the previous call for the first quarter of below 20%. Overall, as I mentioned, the decline in net profit in the first half was essentially due to a decrease in EBITDA that was prompted by the negative impact of regulatory changes in Portugal. So this was more than offset by the better results from EDPR, EDPR Brazil and the market operations in Iberia. So as Antonio mentioned, I think globally, a good underlying second quarter performance impacted by ForEx. So with this, we'll conclude our presentation. We'll now take just a very brief break before we move on to the Q and A. So thank you very much. We'll start with the with the questions. First question that we have comes from Philippe Popatian from OBO BHF. What level of tax rate are you expecting for 2018 and beyond? So I'll pass the question for the CFO. So thank you, Philippe. In relation to the tax rate, as I mentioned, we expect it to be below 20% in 2018. And then beyond, I mean, we expect it to progressively over time to go and increase into what would be the sort of normal marginal corporate tax rate. But turning for 2018, below 2019, probably also relatively low. Okay. Our next question comes from Georgios Gimenez, by Tietland and also from Stefano Dezato from Credit Suisse on regulation in Spain. The first question is on how to review today's news in Spanish press about the CNMC proposal on remuneration of electricity after 2020. And also, Stefan, regarding our prudent approach, how do we see this prudent approach that we refer in our accounts, if we can relate somehow with this. In relation to news today about the CNMC proposal on the duration of electricity activities after 2020, I think globally positive. I think the numbers they are indicating are certainly above probably some expectations that have been created in the past. So we are comfortable that if that is a floor, that would be positive for the distribution activities in Spain. So let's see, obviously, how this progresses. This is just a proposal. Which will need to be discussed with the government and will need to be probably passed through parliament or congress in Spain. So this is still a lengthy process, but I would say generally, in terms of expectations, it's fairly good news. In relation to Stefano, to the Spanish power network, given the prudent approach on regulation, what is the upside if the new government has actually returned unchanged? Just to be clear, our, if you want, prudent approaches in relation to what we did have, which is an adjustment that they are proposing to the assets base relating to the residual life. So it's not necessarily relating to the returns. So I would distinguish the return discussion, which is what I mentioned on the previous question, with this adjustment, which is currently being discussed with the government and in court on the lessee dirades. So even if the government decides to leave the returns unchanged, that would be good news for the overall rate of return on the distribution, but it would not necessarily impact this as opposed to a less EBITDA which I mentioned in the distributions. Our next question comes from Joaquin Maraj from Exane regarding the regulation in Portugal. The question is regarding space. There have been some comments from FCA women about the study on the faster compensation of some technologies in Portugal. Could you repeat the effect of for it? And turning it back to you. Thank you, Miguel. I think that these comments were not new as you know, and they were already there at the end of last year, and we were very clear since the beginning. Our positioning is EDP has acted clearly. Everything was decided, by the way. It's not by health that decided according to the law, according to the contract. And in every year, it was checked and approved by the regulator. So for me, it's something that I really we are very, very clear on this. We stand for what is the respect of contract and law. And I take the opportunity that another question of George, is it possible to quantify the impact on EBITDA from lower funding activity from the current reduced into the price range that we improved? Just to tell you, as you know, we like volatility and something like this volatility and differences. It had a very limited impact in 2018, so probably around 10, probably slightly below. So it means that we'd in a normal in a normal world, this minus 10 will enable the disappear. So we have done a question of one review from previous. So how attractive do we see the fundamentals of the market and where do we see the major pockets of opportunity over the near long term? I think that what we have seen in the recent past on Brazil is that we like the fundamentals, and there are a lot of people that like the fundamentals of Brazil. So eventually, the only thing with the competition on that market because everybody seems to like the fundamentals, as we have been telling for the last more than ten years. So we have been consistent. What we have been doing is clearly, as we have shown in transmission, be in the right moment with the right proposal to create, I think, very exciting returns for the shareholders. We have been avoiding to go into any crazy as we did in the past in other moments where everybody is overexcited, we're going into practical offer that don't make sense like you talked because there's no assumption of transmission. In Distribution, we have been also been very rational. We have been creating optionality as we have seen Celeste. So we have also been strong in trading positioning. We have went into the solar also, solar to clients. So I think that we have been proving very ambitious, but rational structure in the country that we appreciate very much since the beginning. Okay. We have then one question on generation in Iberia. So from strategy management, I don't On something, if it's possible to quantify the impact on EBITDA from The right answer is Miguel. Sorry. So I will pass now for the question on target or guidance on net debt to EBITDA for the end of the year from I think from Philippe or Bartien. I'll pass now to Mirazio. Okay. Thanks for the question. So in terms of target, I think the exact amount of net debt will obviously depend, to a certain extent, on the timing of execution of disposals, which are currently underway. We expect the number to be in the region of 3.8%, around that. So but as I said, that is dependent on specific disposals, but we're on track. Okay. We have then a question from Ruedij regarding the generation Iberia. If we can take it through the hedging policy for 2018 and 2019, So where do you see expected average gross margin for the management in Iberia? Thank you for the question. I will go through the I will guide you through the EBITDA guidance for this year and also the hedging position and tax opportunity. So starting on January 1, in terms of reservoirs, as you've seen, we were 44%, so well below the average of 61%. Now we are the opposite. We are 79% compared to 67%. All in all, this growth, as I did in the beginning, which corresponds to a €50,000,000 EBITDA that is still not part of the first half. Our guidance in early May already consider strong months of April, so we have already included part of it. So whenever we talked the last time, the rain was already going very well. Improvements in hydro volumes did not come with lower prices as one would expect. Steady prices and lack of price volatility hindered the result with energy management level. Thermal spreads were also weak. So we are comfortable within the consensus of that is today at $8.20 fourtwenty 18. In terms of hedging policy, we have for the full year today, six point of our portfolio contracted at 58%. I would like to stress that this 58 basically, and if you see on the financial out financial out, we talk about corresponds to 66 final price. And sometimes, different players talk about different prices. So we have a pair of $58.66 that last year was $55.63 This does not include around seven terawatt hours of index volumes. So spreads locked up for 82 of total expected output and 1100% of gas. The fact that we are if you see the port prices still really not to edge for 2019. It shows makes us optimistic for 2019. So hopefully, with this long answer, I gave you what you needed. We have a final question from Jean Pin from TD Capital regarding strategic updates. So if we have any news on potential investors that I have discussed in the previous call, I'll pass to the CEO. Concerning this question is it does not make sense, and we wouldn't even be credible to present the business plan to the market when we are going through an offer process. So when we finish this process and independently of the offer being successful or not, we will be ready to quickly present the business plan to the market. It means that we have been with all our own work, as you tell them, our internal is in terms of execution of our target continues. The company remains focused. That is very important to share with you. Everybody is focused on their business case. We have a business plan that, by the way, about until 2020. We are focused on delivery, as you see, of the budget the guidance of 2018. And so everything is normal, and we will share it as soon as it makes sense. So we have still a few questions on more related with the tender offer, which probably the reasons we are not answering at this moment. So given that we don't have any more questions on strategy, on results, I will pass now towards you for final remarks. In the beginning, I understand that not only the results were we don't have any surprises, so the questions are less than they usually are, but I understand probably you have more questions on things that we cannot share with you, of course, and this will not make sense with you today. But talking about the results, highlighting, I would like really to stress very strong Brazil, very strong renewables in what concerns, especially full visibility on the growth, namely with all the PPAs that we signed 1.2 gigas since the beginning of the year. I think it's an amazing result. A very strong inefficiency all over. And by the way, Brazil, good in generation, good in distribution, good in creating optionality. So I think it's obvious that we are doing what is expected in those markets. In Iberia, finally, a good rain. Visibility on the regulatory issues that were raised last year at the end of last year. Good, sound financials. Also, the deficit that's of the system reducing more than expected. So we would, yes, clear in line for probably above EUR 700,000,000 reduction on the tariff on tariff system. I think it's important because this gives additional confidence before reducing tariffs for next year without any new measures. Very strong demand growth in Portugal, more than 4%, driven by domestic. So the structural things are there to support a smooth evolution of the system that I believe is critical. The recent news that Miguel mentioned in Spain that were disturbing a lot of people a few months ago, I think, gives additional comfort. And then he was out this morning, was already raised in the conference call. And so business wise, we are there. We also see the offer. I just wanted to tell you, we cannot talk more than I did in the presentation, but I would everybody, if you're comfortable in the sense that we are doing what you should expect, everybody should expect in a moment, we are doing what we mentioned in the report. We are working in what concerns understanding implications of any regulatory positioning in Europe or in The U. S. And all the implications that are will come from that. So we are doing what basically, we are doing what was expected. And we will share this with you, of course, when we can and when it makes sense. So thank you very much for your presence, and see you soon. And that does conclude your conference for today. Thank you for participating. You may all now disconnect.