Earnings Call: Q4 2022

Mar 21, 2023

Welcome to the CEZ Group 2022 results. At our customers' request, this conference will be recorded. As a reminder, all participants will be in listen only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press * then zero on your telephone keypad for operator assistance. May I now hand you over to Barbara Seidlová, who will lead you through this conference. Please go ahead. Hello, everyone, and welcome at our presentation of the 2024 results. I have Martin Novák, Chief Financial Officer, and Pavel Cyrani, Chief Sales and Strategy Officer, here with me. They will take you through the slides and then the Q&A will follow. Now, I'm handing over to Martin. Thank you, Barbara. Good afternoon. Good morning, everybody. I will shortly lead you through the first two parts of the presentation and then hand over to Pavel and he will share with you our thoughts on market development and strategic Vision 2030. On our slide number 3, you can actually see the highlights of 2022, and the key event, actually, which was caused by invasion of Russia to Ukraine. It all led to difficulties and volatility on the market. We are showing you actually a few numbers. There was a significant decline in gas supplies from Russia of 56% year-on-year compared to 2021. As a result of it, of course, and as a result of uncertainty on the market, there was a sharp increase in prices of gas from €34 to €118 per megawatt hour and, of course, in line with such an increase on gas front, there was also significant increase on the power prices from €91 to €299 for the 2023 supplies. Peaks were, however, much higher. As you will see, they were close to €1,000. What was actually done in Europe and what we did also as part of the solution, there was a significant reduction of gas consumption in EU by about 15%, increase of LNG supplies by 69%, and the increase of gas supplies from other countries, about 17 billion cubic meters. CEZ has withstood the crisis successfully. Volatility was high, margin costs were high, and debate about availability of gas was quite hot actually in some parts of, or times of last year. Nevertheless, we made it and secured enough gas. Looking at today's situation, it is much brighter and basically we believe that winter 2023-2024 will be without any issues. On slide 4, there are a few key highlights. Strategic raw materials and immediate anti-crisis measures. We secured LNG terminal capacity in the Netherlands for 5 years, which is able to supply one third of Czech Republic's consumption. We have also ensured maximum availability of coal-fired facilities temporarily, to make sure that we have enough electricity, which as a net exporter, is not an issue in the Czech Republic. We have also secured sufficient inventories of nuclear fuel, still from Russia, and also contracted the supplies for non-Russian fuel from Fortum Loviisa Nuclear Plant, from Westinghouse, and from Framatome. We are now in the middle of process of finalizing similar deal regarding Dukovany Power Plant. We also used the situation to acquire a strategic company, Škoda JS, which means a nuclear engineering company that belongs to Gazprombank. It is our key supplier of maintenance on both power plants. We managed actually, after years of discussions, to basically acquire this company at very reasonable conditions. Zero-emission nuclear energy and decarbonization. We made record 31 terawatt hours of nuclear power generation. We also launched a tender for new nuclear build in Dukovany. We received three bids from three participants, and they are now being analyzed. We are also accelerating preparation of small modular reactors project. We accelerated retail build actually of small photovoltaics for our retail customers. We built actually over 4,000 photovoltaic installations on the roofs of our retail customers' households, and a capacity of 27 megawatts installed capacity. We also received CapEx support for 173 megawatts of our big photovoltaics that we are about to build and also actually submitted another amount, more than 1,000 megawatts, actually, into the second call of subsidies round. Energy savings, we encourage people to save energy. We have actually started a website where more than 2 million unique users visited this website. Looking at slide number 5, actually, there is more information about the LNG terminal in the Netherlands that I already covered. We actually regasified 3.6 terawatt hours at the terminal. It's a fantastic backup to our gas needs in the Czech Republic that we now have, and also great trading opportunity, of course. Looking at the next slide, actually, we are showing a few highlights here. I already talked about some of them. Record nuclear generation. We had exceptional income from commodity trading, which will be covered later. We still hold on to our decarbonization efforts, although our lignite plants were running at full speed to make sure we have enough electricity in Central Europe due to lack of gas. Our plans to decarbonize are still in place. We obtained a permit for long-term operation of unit 2 at the Temelín Nuclear Plant. We managed to secure enough liquidity, which was a big issue, as you will see later, for margin calls. We paid a dividend of 48 CZK per share. The next slide, you can actually see our generation impact actually to both EBITDA and also our net income, adjusted net income. Our generation has brought about 66% of our EBITDA. Total EBITDA is CZK 131.6 billion, and adjusted net income, CZK 78.4 billion. Generation is about 61% of that. Trading, significant income from trading activities, as will be discussed later. Distribution and sales is a stable business, providing somewhat like 17% of EBITDA and 16% of net income. Net income outlook. We announced actually on February 2 this year, a net income outlook of CZK 30 billion-CZK 40 billion, which we are now confirming. When we look actually at the history based on adjusted net income of CZK 78.4 billion, our simple calculation of potential dividend, if we stick to 80% payout rather than 60%, because our range is 60%-80%, but if we calculate 80%, the dividend would be CZK 117 per share. Absolutely record high. In total, CZK 63 billion for all shareholders. On the last slide of this section, we are actually summarizing how much will be shared with the Czech Republic. More than CZK 100 billion, CZK 44 billion from dividend, CZK 30 billion-CZK 40 billion from windfall tax and cap on prices that are applicable in 2023 only. Then ordinary income taxes being paid for 2022. Now let's switch into more details on the financial part of the presentation. On slide 11, I'm sorry. You can see actually Q4 financial highlights. There is also in the backup a lot of information about Q4 itself. In our presentation, we will comment mainly 2022 and 2023. For 2022, we increased our operating revenues by 27%, or to CZK 188.5 billion. EBITDA CZK 131.6 billion and net income CZK 80.7 billion with adjusted net income CZK 78.4 billion, which are actually multiples of what we achieved last year, as you will see later on. On slide 12, there is a comparison to our latest outlook. We actually beat our expectation fairly significantly. There are three main factors. Another CZK 3 billion from prop trading that we couldn't plan for. We generated more nuclear power, and we also achieved positive results on derivative trading that actually becomes part of P&L in 2023, which is bringing about CZK 3.5 billion. Of course, appropriately, this is also moving from EBITDA to net income after tax. On slide 13, important slide. Actually, you can see a waterfall chart showing you the main differences between 2021 and 2022. As I said, we actually doubled our EBITDA year-on-year. CZK 52.3 billion of improvement is coming from generation segment. Power prices actually contribute CZK 46.5 billion. Then we have higher availability of nuclear plant, CZK 0.8 billion, and temporary effect revaluation from 2021 derivatives that actually hit P&L in 2022 was CZK 3.8 billion. We paid actually a levy or cap on generation revenues above caps that were introduced in December, and we paid CZK 1.2 billion. Trading year-on-year improvement CZK 18.7 billion, CZK 20.1 billion coming from prop trading and CZK 1.1 billion is actually negative impact of Gazprom not fulfilling their contractual obligations. We are now actually in arbitrage with Gazprom in Switzerland. This is the loss of them not supplying us and us needing to purchase at the market price. Those are all total overall improvement of CZK 18.7 billion above our record high 2021. There is actually a slide where I will explain more about trading results. Then on the next slide, number 14, generation and mining segment, EBITDA CZK 71 billion improvement. Again, the factors are fairly similar as those that I already described on the previous slide. What is important to note is that actually our average realized electricity has increased year on year from EUR 55 to about EUR 100 per megawatt hour. So average achieved price for 2022, including all hedges from three years ago, is actually EUR 100 per megawatt hour, of course, both for zero emission facilities and also coal plants as well. When we look actually at mining activities, mining activities are worth mentioning. They increased their EBITDA by almost 40%, due to higher demand for coal from external customers, also from our own power plants. Of course, there is a negative effect of operating expenses, because more coal means also higher expenses. But overall, we could see 40% increase in EBITDA to CZK 6.2 billion. On the next slide, you can see actually an explanation of our commodity trading. We made almost CZK 27 billion, which is a combination of two factors. One is experience of our trading team, but it would probably not be enough, if there were not for extraordinary high volatility on the market. Under old times, your daily volatility could be a few tens of cents per megawatt hour. In extreme case, we actually had a volatility of EUR 500 during one day. So our trading was able to spot the trend and actually made almost CZK 27 billion. You can see some numbers, almost quarter million transactions. We traded 419 terawatt hours of electricity and 1,900 terawatt hours of natural gas and 618 million tons of emission allowances. So pretty significant trading activity on prop trading side. You can see also geography of the trading team. CZK 27 billion is actually, as you could see year on year, about CZK 20 billion more than we achieved in 2021, which was a record year as well. Under normal years, trading was able to deliver CZK 1 billion-CZK 2 billion. So CZK 27 billion is really extraordinary result that we do not plan to be repeated this year. Distribution and sales segment, very similar as last year. There is basically flat distribution as it is regulated business on retail and ESCO, meaning B2B business. There is a decline of CZK 1 billion or 19%, mainly caused by lower gross margin on sales of electricity and gas in Czech Republic due to increased purchasing prices of commodities. So the segment actually achieved CZK 4.4 billion. Changes on net income side, I think what is worth mentioning is actually asset impairment. As you can see, in 2021, we had negative or impairments of CZK 15.5 billion. This year, we actually did not have any impairment. We had a positive impairment of CZK 3.1 billion, mainly adjustment to value of mining company. Mining company was doing so great that actually it is impacting, 2021 has impacted cash flow model that we use to predict basically future cash flows that we will appear to reverse part of the originally booked impairment back. Having a lot of cash for margining, we also received, due to increased interest rates, more interest income. So our net is actually only CZK 1.2 billion negative versus almost CZK 4 billion negative in 2021. Important slide, actually, 18. Here you can see what was happening on margining front on August 26, when prices have doubled within a few hours from EUR 500 to almost EUR 1,000 per megawatt hour. We had to provide, during intraday calls, CZK 50 billion in one day, having almost CZK 200 billion in cash deposited with power exchanges. Which compared to our annual sales, that include everything, including distribution and retail and whatever, all activities we do that were CZK 288 billion, is extraordinary high number. It is for most of the companies difficult to keep their annual sales in cash on the bank accounts. We had to take many measures, about 20 measures, to overall secure enough liquidity those difficult times, including receiving EUR 3 billion from state, as many other companies did. We managed, as of March 13, we are actually having about CZK 173 billion of liquidity. We may be slowly reducing it, but still would like to have a buffer for unexpected situations. The last slide of the slide before last, slide 19 in the financial section, is actually confirmation of our EBITDA outlook for 2023, CZK 105 billion to CZK 125 billion, and adjusted the income CZK 30 billion to CZK 40 billion. You can see that it is lower than our 2022 reported numbers, and there are factors that actually show you what is the variance. Average achieved price today is estimated to be EUR 130 per megawatt hour, so the price is going up. We have a few negatives. We don't expect the prop trading to be able to repeat CZK 27 billion, and actually there is a variance of CZK 22 billion, so you would expect it to make more like CZK 5 billion or CZK 127 billion, which was really a record-high result. Then we have also caps on power prices from nuclear and from lignite plants. They will cost us CZK 8 billion to CZK 12 billion, and then windfall profit tax CZK 20 billion to CZK 25 billion. We also have a relatively high open position, 17%-23%, as you will see on the next slide. On the next slide, you can see actually our hedging. Due to high requirements on the margin front, we actually slowed down and stopped selling through power exchange. In last six months of 2022, we actually redesigned our risk model that also takes into consideration possible development of crisis, liquidity requirements, and we again started to hedge as originally straightforward line, three years, actually as of first quarter of this year. You can see actually average achieved prices so far, amount of power sold as of December 31, and the same also for carbon credits that we are purchasing. This is all for me now, and I will hand over to Pavel Cyrani. Okay. Well, thank you, Martin. I will have a quick review of the market development and also of our strategic Vision 2030 accomplishments to date. Starting on page 22, we have a quick review of the prices in the region, which are basically Czech/German prices. By today, we are almost back to the start of the year of 2022. Actually, when I looked at the screens this morning, the electricity price was EUR 129, so almost to the euro. Same as the beginning of the year. Which means that we have most likely overcome the hottest part of the crisis. However, I'll have some comments what we have in plan and what we think needs to happen in the energy sector going forward for the midterm and long term. How did the sector overcome the situation? It was a combination of things. Number one, the LNG imports to Europe have been increased significantly, replacing most of the Russian-originated gas. Number two, a lot of gas was unused through savings. Also people and companies using less gas. What supported these savings were also warmer weather, warmer winter, both before the year end and also at the beginning of this year. The situation is similar across the broader Central Europe. Czech Republic being in the middle of the map on page 23, you see that the prices are well correlated with Germany, Poland, also Slovakia now. Hungary being less self-sufficient in electricity, prices being higher. Also France still sticking out with higher prices given the low availability of their nuclear power plants. Actually, 2022 was almost a quarter, 25% below the normal annual generation. 2023 looks better, but still not back to the standard. That keeps the prices in France higher. What is also a good measure on how Europe and Central Europe stand with gas supplies is the filling of the gas storages. You see the gray area, which shows the five-year interval of gas storage fulfillment. If you look at the red line, that's the line of the last year starting extremely low, out of the gray range, but then slowly catching up, until in November it was actually a record high. Last year by November, Europe was well set for the winter. Actually, you see even an anomaly where the gas storages have been filled again, before the year-end, driven by the very warm temperatures we had. Starting again at the beginning of the year with the green line, which is for year 2023, you see that we are following the upper bound of the five-year range. I think Europe is well set also for the winter of 2023/2024. Actually, the German Tank Storage Association expects the gas storage to stay more than 50% filled all the way through the end of this winter and beginning of the spring until the refueling starts again. Czech Republic is similar. Today, 52% of the gas storage is filled. Also we are almost finishing the winter season and starting the refueling. I think this good news translates into stabilization of the electricity prices. We discussed on the previous graph that these were the prices for 2024 delivery, but you see that the situation is similar for the 2025 and 2026 delivery, with the gas prices dropping down to around EUR 40 per megawatt hour and electricity prices. On this graph 110, but actually again, looking at the screen this morning, they are just a little slightly over EUR 100. Which actually, looking at all kinds of predictions of analysts, these prices around EUR 40 gas and about EUR 100 electricity seems to be the stable level of prices for this decade. How does our Vision 2030 fit into all of this? It was announced obviously before the war. It was announced on the notion of achieving clean energy. I think we still believe that this vision holds for two reasons. Number one, clean energy is still needed, but also clean energy for Europeans and for Czechs means energy not based on importing fossil fuels. It actually fits well into getting rid of the supplies of all kind of fossil fuels from Russia and also from other regions. I just remind you of the two strategic pillars. One was the decarbonization of our generation portfolio and reaching climate neutrality. The second pillar was providing the best energy solutions so our customers can achieve also their decarbonization and climate targets. On pages 28 and 29, they summarize the achievements. I think the company done quite well. Many of the things have been already mentioned, including the record nuclear generation, also progress on the long-term nuclear projects. We are also already getting more active in the renewables actual construction. Getting the first batch of support from the modernization fund and applying for a much larger batch in the second round. We are also building renewables in Germany. That's on the generation side. On the customer side, page 29. Also, we saw a significant demand growth in the solutions from our customers. So both connecting PV plants by our distribution, also building them for our customers, either by ČEZ Prodej in the retail segment or ESCO in the B2B segment. All of these numbers are record high, never seen before. We see not necessarily this trend in terms of the quadrupling, but we do see still a trend of these numbers growing also into year 2023. We've also worked hard on improving our ESG rating. We always believe that we've done many more things than were reflected in our ESG ratings. So we worked on the communication of these achievements, and they were reflected by improving all of our main ESG ratings, as you can see on page 30. Apart from the fact that we are glad that it is reflected in the ESG rating, we are also able to issue first euro-denominated sustainability-linked bond in the Central and Eastern Europe in April last year with EUR 600 million, with a coupon linked to sustainability targets. The next few pages, they recap the overall financial targets. These pages have been already communicated in February, so this is just a quick review. We were originally basing our EBITDA long-term targets on basically stable flat price. All of the growth was driven by our internal growth, growing our generation portfolio, growing our customer base and so forth. Now with the prices going up, let's say towards about EUR 100 by 2030, that's let's say the middle of the internal forecast, there is about CZK 40 billion on top of the original numbers. We are now looking at CZK 125 billion to CZK 135 billion by 2030. And obviously we were ready to fulfill our Vision 2030 investment plan even with the prices at around EUR 60. And we are even more comfortable fulfilling these goals and doing the investments with higher prices. You see that our forecasted net debt to EBITDA ratio dropped to 1.5 times, so well below the 3 times target. And now on page 33, it's the final recap. I think along the lines that we have been working in 2022, we also plan to work in 2023. Increasing our emission-free generation, working on the solutions for our customers, growing our customer base, continuing on our ESG priorities, and all together being ready to achieve EBITDA of CZK 105 billion to CZK 125 billion with CZK 30 billion to CZK 40 billion adjusted net income. And overall, paying over CZK 120 billion to our shareholders through dividends and to the government through various taxes. And I think we are well set to achieve these targets. This concludes our presentation, and we are now ready to take questions. Thank you. If you wish to ask a question, please dial 01 on your telephone keypad now to enter the queue. Once your name is announced, you can ask your question. If you find your question is answered before it's your turn to speak, you can dial 02 to cancel. And if you're using speaker equipment today, please lift the handset before making your selection. So once again, that's 01 to ask a question or 02 if you need to cancel. Our first question comes from the line of Piotr of Citigroup. Please go ahead. Your line is open. Hi, yes, good afternoon and thank you for the presentation. I have a couple of questions. Firstly, I wanted to ask about your guidance on page 19. You say this is based on the average realized price between 120 to 160. Shall I understand that this is the top and bottom end of the range, and you currently look at it as 130 based on the mark-to-market assumption? Just a clarification if this is the right thing, and then how much within the guidance you include the contribution from the LNG terminal that you have as a follow-up. Thirdly, I wanted to ask you a question about whether you have any more color on this potential takeover of the company by government. Could you been doing some internal analysis whether that makes sense to split the company and so on? Have you reached any conclusions on this? Anything you can add would be helpful. Thank you. First, guidance. Yes, today we expect, given what we know, is actually 130 is the best estimate. As you could see, 120 to 160 was something that we had as a range. Things can be still extremely volatile. We still have about a significant portion of power actually to be sold during the year in the spot market. So that's why we provide such a wide range. If it were 130, then we would be comfortably filling into 30 billion to 40 billion. But I don't want to make a speculation how much would it exactly be. I would wait for the main numbers when we will probably narrow the band. LNG terminal is included, but basically everything we know so far is included, so including LNG terminal. But again, what could be an income from LNG terminal really depends. Similar question, if you asked me last year whether trading would ever make 27 billion CZK, would never expect it. So that's very difficult to predict. On the transformation or on the changes. Look, I think the situation remains the same in the sense that we as a company have been discussing and thinking about how to best finance the development of new nuclear. State ownership of the nuclear assets was one of the options. I think the government is looking at it, at least from what I understand also from the public speeches made by the various members of the government. But there is nothing new that we could share with you at this moment and that we would be aware of. And just a clarification on this one. Is my understanding correct, that this change of law would actually enable a scenario in which you could directly sell nuclear reactors to the state and it allows for a split, it has nothing to do with a takeover, the premium in the market? I am not sure I understood fully the question. First of all, which law are you talking about and what selling you are talking about? There was a change of a law that would lower the requirement of AGM thresholds to split the company. There was a proposal that was at the end of last year, and from then onwards, the share price moved upwards in response to this kind of anticipation that this law is done as a prerequisite to split the company. Therefore, when we think about the transaction structure, one of the options would be a takeover of a company, but the other is alternatively just to offer you a certain price for two reactors, right? Then at that basis, the government would pay a fair value for the assets. But as I understand, you do not have any conclusions on the split at the moment that you can communicate. Exactly. At this one, we have no conclusions. Okay. Thank you very much. Thank you. Our next question comes from the line of Arthur Sitbon of Morgan Stanley. Please go ahead. Your line is open. Hello, thank you for taking my questions. The first one is on the European power market reform. We saw that the proposal of the European Commission creates the possibility basically of implementing two-way contracts for difference on new low-carbon investment, and that includes the life extension. I was wondering if that could be part of the plan for your nuclear reactors that get a life extension in the Czech Republic. That is the first question. The second one would be on the debt. It has increased a lot in the last three months of the year. I was wondering if you could walk us through what is temporary and what is more structural in that debt increase, and if you can provide some indication for debt at the end of 2023, that would be helpful. The last question would be on the LNG terminal. I was wondering how much of EBITDA was generated on that in 2022, and if it was included in the trading division. Thank you. Well, let me start, first of all, on the market reform. I guess two statements. We welcome the fact that the proposal by the European Commission includes long-term contracts and CfDs that are also applicable to nuclear. So it's not only the renewables. So I think it's a good news for nuclear operators. At the same time, we at this moment did not or are not considering to use these tools for lifetime extension. At least the way we look at the lifetime extension of our nuclear power plants, they don't require such an extreme investment that would call for a CfD type of contract. I think they are well in the money at the current prices and even at the lower price of the pre-war prices. So that's our perspective at this moment. Obviously, it may change in the future, but at this moment it's like this. Now on the LNG terminal. Yes, it is in the result. It's part of the trading result, but we don't comment on the internal split of the prop trading results between the different kind of strategies and type of things. Okay, and debt actually, debt level is There are quite a few temporary factors in our debt numbers. So I would expect that actually it will be reduced during 2023. But nevertheless, net debt to EBITDA is actually a fairly low number and so that's the short answer. Yes. Arthur, you also ask about why did that increase in the fourth quarter? Just remember that this year we paid the dividend only in November, so that explains the increase compared to end of September. Thank you. If I may, just a follow-up question on the first one, on the market reform. I was also wondering if so I understand you would not be so much interested in having a CFD with the life extension, but I was wondering as well if there is a possibility that a CFD could be forced upon you. Look, at this moment, there was no word about this, no discussion about this. I am definitely not going to ask the regulators what they think about it. Thank you. Thank you. Our next question comes from the line of Joe Molander of Red Intelligence. Please go ahead. Your line is open. Thank you very much for the talk. I was just interested, given market turbulence arising from recent banking failures and your comments on net debt to EBITDA falling this year, do you still expect to be able to refinance upcoming Eurobond maturities, especially the EUR 50 million 0.875% note due in November? Any thoughts would be much appreciated. Yes. I would say that we don't expect any issues. We have only one maturity, actually, in 2023. When I look at it, actually, it's on page 55. So 2023, we have about 5 billion CZK to refinance. So immaterial amount, nothing to refinance in 2024. So very comfortable position. That's better. Thank you very much. Thank you. Our next question comes from the line of Harry Thompson. Please go ahead. Your line is open. Thank you for taking my question. Against the backdrop of the release of the Critical Raw Materials Act last week, I wanted to ask about the Cínovec Lithium project that you have a majority stake in. Two parts to the question. First part relates to permitting. In April last year, you signed an MOU with the Ústí regional government, which was focused on progressing that project. Particularly of note was the references to concluding the environmental impact assessment. I think that was first submitted in 2021. Can you give us an update on how you are progressing with the EIA and more broadly, when you expect this project to be fully permitted? Second part to the question really related to that. In your February investor presentation, you show Cínovec making an EBITDA contribution from 2025 onwards. Are there really any changes to that? Can you talk about some of the key milestones that you're working on relative to the project that lead us to getting into production? Look, first of all, we again welcome the main highlights from the critical raw materials, focusing on making it easier to develop mining operations in Europe for the European companies, especially for those that would produce critical raw materials. At this moment, we focus on two things. One is doing a detailed feasibility study with all the testing of both the mining procedure and mainly extraction, refining of the lithium salt, and then also on permitting. We are still discussing with the regional government and working on changing the regional zoning plan so that later we can change or implement the projects in the local zoning plans. The key milestone that we focus on is that in this year, we would like to finalize the detailed feasibility study. We would like to finalize the regional zoning. Based on these two outputs, we want to basically give go ahead or not, but we hope we will give a go ahead for this project for the next phase, where we already start the siting and the construction permit development. In terms of timing, I think I have to say I don't recall materially we would mention 2025 being a year where it already produces EBITDA. I think that would be rather aggressive. I assume we will start mining and producing lithium if everything goes well, about one to two years later, depending on all kinds of things. This is what we are now looking at. Thank you. Thank you. We currently have one further question in the queue. Just as a reminder to participants, if you do wish to ask a question, please dial 01 now. The next question comes from the line of Jan Raška at Cyrrus. Please go ahead. Your line is open. Thank you very much. If I understand correctly that Sorry, Jan, we are having trouble hearing you. Your line is a bit muffled. Are you able to get closer to the mouthpiece or the speaker? Do you hear me? That's a lot better. Thank you. Yeah. My question is, understand I correctly that your estimates of levy on generation revenues between CZK 8 billion-CZK 12 billion is related only to forward contract on the year 2023? The second question, of course, you are continuously selling electricity on other years, 2024, 2025. Is this levy on generation imposed also on other forward electricity contracts? I mean, contracts on the years 2024, 2025? Thank you. The way the levy works, it actually looks at, it will take almost every day. It looks on the average achieved price through all contracts related to this delivery on this date. So it takes into account all the forward sales historically done and also the spot sales on the day, and it calculates your average achieved price. Then it looks at what power plants you used for the production, and given that each type of power plant has a different cap, then it makes basically an average specific cap for the production of that day and then compares the two. Then basically, this is the levy that you pay. To be very specific, I made this example of one day, but what it also does, it takes an average. If you are one day below the cap and one day above, it takes the average of the two, and it looks if the average is above the cap. We actually pay monthly advances. However, the levy will be calculated based on 2023 full year weighted average for each part of or each source of power generation, meaning nuclear and lignite in our case. It applies only for 2023. Yeah. So there is nothing in 2024 and 2025 as the law is applicable for 2023. Windfall profit tax is applicable for 2023, 2024, 2025. Okay. Thank you. Thank you. As there are no further questions in the queue at this time, I will hand back to our speakers for the closing comments. Okay, thank you everyone for taking part. If some additional questions come up to your mind, do not hesitate to contact investor relations. Thank you and bye-bye. Goodbye. Thank you. This now concludes the conference. Thank you all very much for attending. You may now disconnect your line.