Dear ladies and gentlemen, welcome to the conference call of PKM Orden. At our customers' request, this conference will be recorded. As a reminder, all participants will be in a listen only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulty hearing the conference, please press the star key followed by zero on your telephone for operator assistance.
I will now hand you over to mister Konrad Wood Vuzserik IR director. Sir, you may now begin.
Thank you, operator. Good morning, ladies and gentlemen. Welcome to the conference call regarding PK and Olin long term strategy until twenty first. The presentation that was emailed to you and is available on our website will be delivered by Carol Volk, head of strategy, me and Michal Verlig, executive director for finance management. After the presentation, as usual, there will be a q and a session.
So during this session, several directors from PK and Nolan will be ready to take your questions. And with no further delay, I hand over to Karol. Karol, Karol, is the floor is yours.
Thank you, Konkat. Good morning. Good afternoon. Today, we are presenting our 2040 strategy. This is very important moment for the round trip.
We are setting the direction that will shape our company coming here. We transform Orland Group from downstream oil and gas supplier into new energy company, able to compete in the face of trade energy transition. We aim to actively manage our business portfolio and build the account in particular, maximizing performance of our existing business lines, developing strategy correct contracts, and investing in the future with clients on new technologies and business models. And the first section, we describe our our aspiration and we Skype our vision for for our business in 02/1930. So let me start with slide number four, where we'll Skype the trends that are reshaping our environment.
There are midcans that challenge our business. For a long time, the fuel the for the long time, the fuel and energy sector has not faced so many factors that are reshaping their environment in the ground. The main drivers of the energy transition are new technologies, growing cost effectiveness of renewables making investment in this segment more profitable. Second aspect are changing customer expectations that require us to deliver increasingly efficient and then the government that you can look at some solutions. Furthermore, I think public awareness necessitates the mitigation of impact we exert on the natural environment and external stakeholders.
Just as one example, the regulatory placing are ambitious for greenhouse gas emission reduction. We know that there is no turning back from the energy transition. Our group group has strength, capabilities, and extensive experience during the process. We consider it as a great growth opportunity for the company. Going further, we we show our ambition, and Oregon Group ambition is to become a business leader of sustainable energy transition in Central Europe.
In 2030, we have gathered more than 10 countries and extended value chains. We want to generate two and a half fold increase in EBITDA operating profit. By the end of this decade, our renewable energy capacity will increase to 2.5 gigawatts. As a result, we will rank as one of the region's largest producers of clean energy. We aim to become a supplier of integrated solutions to customers, and we are considering to expand our non fuel offerings.
We will grow our network both domestically and outside Poland while deploying new formats beyond service stations. We want our retail network to ultimately compare to over 5,005 6,500 stations. We also want to be open for new mobility with over 1,000 EV fast chargers. Our applications will be underpinned by sustainable development. We will invest in clean technologies designed to deliver environmental benefits.
The Orlan 2040 strategy will put us well on track to achieving our long term objective of carbon neutrality by 02/1950. For years now, Orlan has been one of the top priority players on the market, delivering the objective result for its shareholders. We are poised to maintain the momentum with our envisaged confirmation as the key out to the end. We are building a multi energy indicated group based on the robust and well diversified business segments as well as possible financial policies. We also aim to share the profits with our shareholders.
Starting from next year, we will receive dividends of 3.5 per share or more. Going on slide number six, we want to catch we want to to talk how we are implementing these changes, especially taking into account that in the long term, the processing of oil for the need of transport fuels will also is important. Hence, we must maximize profit from our current core assets and develop strategic segment segments throughout the company. They will guide our transformation and the purpose of building new business areas. How do we want to achieve this goal?
We want to actively want to actively manage the portfolio of our current and future business activities. Therefore, by formulating ORLAN twenty forty strategy, we adopted a approach based on three main strategic field of play with with respective capital allocation. They include maximization of profit the profit value of the current business segment with against 2040% of of total CapEx. Strategic development development of strategic projects for which we allocated about 50% of the of the CapEx pool. And finally, investing in the future, including including new business models and new technologies, accounting for up to 10% of the CapEx pool.
Going on Slide seven, we let me describe to you how the strategic logic defines the key directions of each business idea. Firstly, we will aim to maximize profits from our existing business segments. We are aligning our upstream portfolio. We are dumping up the efficiency of our current downstream assets. We are investing in low carbon protection of our limitations.
We are expanding our fuel container network and offering. Secondly, we are currently copying the new chemical areas. As said, about half of our investments will be spent on building new chemical areas. Renewable at low emission energy sources as well as modern petrochemicals are of key importance. The latter will will be crucial source of revenues from crude oil processing in the coming years.
We will also develop non fuel retail as a strategic field of the day. Our focus will be on the rollout of new formats for retail customers. And as the last third pillar, we will spend approximately 30% of our total CapEx on investments in the future. These are this will include new mobility, hydrogen, recycling, research and development as well as digitalization. Investments in this area will provide us with a basis for future product growth and development beyond 02/1930.
Page number eight. We want to underline that our strategy is underpinned by sustainable development. This is why we directly spent over €30,000,000,000 almost €7,000,000,000. That is almost one third of our entire development CapEx budget to advance this goal. Sustainable development is not only about significant emissions.
It's also about harnessing renewable energy, expanding biofuel capacities, and following up alternative fuels. These areas, we have already in these areas, we have already built some capabilities, but we are set on developing further. We realize that sustainable development is not only our ability, but can also be a source of healthy returns. Page number nine. In this context, we reaffirm our commitments to reduce emissions with a target of necessary carbon by 2,050.
Two months ago, in September, Orang, as the first oil and gas fuel company in Mongolia, announced its ambition to become carbon neutral. Our 2030 strategy is the main stepping stone towards this target. With the coming decade, we will reduce CO2 emissions from our existing refining and the refining process by 20% and from our generation by 30%. We have developed projections for our decarbonization strategy and pipeline of calculated initiatives. We have six investment projects designed to reduce carbon emissions.
And finally, on slide number 10, we share our financial effect of this strategy. Over the twenty first long term strategy should deliver significant value for our share shareholders. The implementation of our strategic objectives will contribute to more than two and a half times increase in BTA operating. A significant part of it and 4,000,000,000 losses will be the result of conducted and finalized acquisitions of Energergo Group and Las Vegas. However, the investment based on the long term technological consumer and environmental trend will be of key importance for the development of Olin.
This and they should add additional PLN 30,000,000,000 in profit to our operating. Thanks to sustainable business model, over 02/1930, we will generate approximately 26,000,000,000 in EBITDA in 02/1930. We perceive this amount not just at CAMEZ as an obligation towards our shareholders. And going, going to the next section, we wanted to share some, some thoughts about our health so far. On slide number 12, we wanted to compare our work about with the median for the most important competitors.
Over the last decade, Oregon has been one of the fastest growing players in oil and gas, more than doubling its EBITDA within this period. Furthermore, in the face of pandemic, our company turned out to be more resilient than the competitors. We want to maintain this upward trend in Korea. The key to achieving to achieving this object objective is transformation. Slide number 14.
Coralyn is changing because it it has strong grounds for it. We have constantly implemented our previous strategy into the financial key results, which allow us to invest in the future. We have delivered on our key operational and financial targets two years ago in our strategy update from 2018. Operating profit and CapEx investments are in line with our assumptions. We maintain financial parameters on safe and stable growth.
Currently, we are operating in difficult and unstable environment, but we have solid technical foundation foundations for others. Slide number 14, we consistently implemented our strategic objectives and conducted development investments. We have taken a number of actions to prepare for the changes that are happening in front of us. We acquired Energia Group with a significant market of renewable energy assets. We have gained access to extensive distribution network and to large number of individual customers.
We have launched and are determined to follow a goal of acquiring goal acquiring an influence goal of lot of crypto. We have already secured conditional accounts compared mission, and we are in the advanced stage of implementing the committee. We have also initiated the process of a Hawaiian PJMIT, Politic Gas Distributor. We have made very good progress in the publication for our for our largest power generation candidate, the construction offshore wind farms at the Baltic Sea. We are developing our KT business.
We are also exploring new solutions to solidify our best position as a leader in the KT area. The acquisition of Kluge, plant countrywide catering chain, with the acute access partner here, expanding our retail presence beyond the service station network, optimizing the cost of logistics, and allowing us to extend the gain from our customers. Slide number 15. As a result of this action, Orlan has built a solid, well balanced base for project work. We are a leading defining supplier in the kitchen with six refineries that we think over 40,000,000 tons per year.
Our Pacific American office are producing 30 products that is mainly delivering to our deliver to our customers from over 60 countries. We have also 3.2 gigawatts installed generation capacity of which 0.5 gigawatts are renewable and 1.1 are gas fired facilities. Orland operates over 2,800 service stations across five countries, serving over 50,000,000 customers. Finally, we possess approximately 200,000,000 more to $50 of high high return. Our environment is changing, and the water in which we operate undergoes fundamental changes.
On slide number 17, we show some of which have the most significant impact on the energy sector. First, we can observe slowing growth of crude oil demand driven by increasing energy efficiency, development of alternative alternative fuels and higher fare of buyer components. Furthermore, factors such as COVID nineteen pandemic caused disturbances in oil and gas market. On the other hand, new energy sources become more and more competitive due to growing scale and technological developments. They are additionally driven by increasing environmental awareness and new regulations focused on the energy transition.
Finally, we witnessed evolving customer expectations, which includes preference for digital distribution channels and tailored offer. Slide number 18. These fundamental changes and the implications can be particularly visible in the evolution of energy mix. International Energy Agency forecasts the upcoming year demand for the energy generated by renewable energy sources will be growing the fastest, more than three times faster than for any other source. And slide number 19, The market stands that are growing globally are especially important for Eastern Europe.
Eastern Europe countries follow the same market developments as all their member states of the European Union a few years later. This could lead both challenges and opportunities. As late adopters, the pace of transition to see against the right behind Western Europe. However, late adoption provide opportunities for market expansion under most under most recent innovative and cost effective technology. Our loan group being aware of the candidate looking build life and build strategy based on this new business.
And on slide number 20, we showed opportunities in new business IPF that offer our group group prospect. In view of the direction taken by the energy transition, renewable energy, in particular, wind and solar power, is in the field most attractive business opportunities. For gas generation being a perfect complement to to the future and ex energy mix provides additional additional attractive business idea here. Finally, we are also there are also many ideas that will become key for our future development and key areas of competition among energy players. We are talking about alternative fuels recycling or hydrogen.
So let me hand over now to Kagat, who will share power of the story. Okay.
Thank you, Karl. And now I will describe the section Orlan 02/1930. So I think that we should ask the question how we're going to deliver on our ambition. And what we can say, Orlan further growth will be driven by strengthening position within existing business lines expansion into new promising areas, as already Carlos mentioned. First of all, we want to maximise profits from our current assets.
Therefore, we're going to modify our portfolio of upstream assets, increase efficiency of our refining and petrochemical assets, invest in low carbon conventional power generation and expand our retail offer. Secondly, we entered into new promising areas via substantial investments into renewable energy sources, alternative fuels, recycling as well as biofuel components and hydrogen. We will also focus on new formats and services for retail customers. Online two thousand thirty will be a company anticipating and proactively responding to customer needs. All investment projects and M and As will let us, to increase the base of customers.
And, of course, customers are the most important for us, and, we have the potential to fully meet their expectations. We operate in many areas simultaneously and we are confident that this is a receipt for the success. We have a clear target and we know how to further develop our loan group. We have also huge, experienced and skilled people, which will allow us to successfully execute our strategic plan. Now let's move to Slide number 23.
To build a strong multi utility concern, we must further invest in our main areas of business to increase the scale and improve efficiency. We will focus on further consolidation and integration of our refining and petrochemical assets. We will squeeze maximum value from each barrel of oil and expand our capacities in petchem. We will continue to do what we do the best. So following the successful launches of our CCGT power plants, we will keep investing in low emission gas based power generation.
We will further develop our fuel and non fuel retail business. And finally, we will strengthen our resource base via upstream investments. Simultaneously, we will enter into new promising areas within our existing operational segments. We will supplement our refining business with major investment in bio and alternative fuels, including hydrogen. Similarly, our basic and advanced pet chem business shall shortly be complemented by the growing capabilities in mechanical and chemical recycling.
Within our power segment, we will be strongly investing into zero emission renewable energy sources, which are set to become an integral part of Orland Group business in the future. Our retail offer will be broadened with new services and formats all under strong and more recognizable brand, Orland. And in Upstream, we will follow the market and create a diversified portfolio of sustainable assets with a strong focus on natural gas. Those are pillars of Orland Group's growth and the transformation till 02/1930. Next slide, Slide 24, shows the first of our segments.
So Orland Group definitely have a strong and well established position in the refining industry and going to keep that way. So integrated assets of our, are our competitive advantage. We operated, now six refineries in Poland, Czech Republic and Lithuania, are processing, roughly speaking, 33,000,000 tonnes of crude oil on a yearly basis, which makes us a leader in the region. Refineries will remain our key assets till 02/1930. In order to maximize the value of our refining business, we need to have the most efficient assets in Central Europe.
To that end, we will seek to get the most from each bottle of oil. Therefore, we plan selective upgrades and reconfiguration improvements, continued efforts to maximize energy efficiency, cost optimization and oil conversion, and development of initiatives reducing emissions. Within the coming decade, we will reduce CO2 emissions for our existing refining and petchem assets by 20%. We also expect lot of refinery to shortly become a part of our group. That's why we aim to effectively leverage integration synergies both in the production and logistic level of the group.
Given the changing EU regulatory environment, we have to invest in new green technologies like biofuel and biocomponents projects, which will allow us to increase biofuel production capacities more than six times to the level of 2,000,000 tons in 02/1930. We are also building hydrogen generation and distribution capacities. The consistent implementation of our automotive grade hydrogen production plant has already positioned us as a market leader. No doubt, hydrogen is a fuel of the future. Therefore, we will make hydrogen fuel dispensers available to our customers at our fuel stations.
Our target is to reach in the refining segment EBITDA at the level of 7,000,000,000 in 02/1930, which is more than 2.5 times higher comparing to the results from 2019. Total EBITDA generated by refining segment in years twenty twenty one-two thousand and thirty is estimated at the level of roughly speaking PLN56 billion. Till 02/1930, we're going to spend roughly speaking PLN24 billion PLN of CapEx. Our main targets for refining segment are presented on the next slide, Slide 25. Now let's move to petchem segment, so Slide 26.
Petrochemicals will be a priority growth area of PK and Orland until 02/1930. We aim to become one of the Europe's largest integrated petrochemical producers within the next decade. Our strategic goal, is to steadily grow the share of specialized petrochemicals in the group's product portfolio and establish a strong foothold in the recycling market. So this is our response to the global and regional trends. Our 2030 goal for PET chem business is to expand the production capacity of basic petrochemicals by development of olefin complex.
This should serve a base for developing specialized products such as aromatic derivatives and ethanol. Once these plans materialize, the share of specialized products in Orland Group portfolio will rise from today's 16% to around 25% in 02/1930. We will also drive up the group's share in the promising polymer segment. So our strategy until 2030 envisions expansion of polymers value chain and entry into compounding and concentrates. In a parallel effort, we will strive to establish strong foothold in the developing markets of plastic waste recycling and biomaterials.
By 02/1930, PK and Orland will recycle plastic waste via both mechanical and chemical processes and will make an entry into the biomaterials segment. We will launch a plastic waste recycling facility with a total capacity of around 300 tonnes up to 400,000 tonnes per year. Our target is to reach EBITDA at the level of 7,000,000,000 polyslotters or comparable level to the refining segment, which is more than three times higher comparing to the results from 2019. Total EBITDA generated by petchem segment in years twenty twenty one-two thousand and thirty is estimated at the level of, roughly speaking, 48,000,000,000. Total CapEx till 2030 will reach up to PLN 44,000,000,000.
Our main targets for Per Chem segment are presented on the Slide number 27. So now let's move to Energy segment, Slide twenty one twenty eight, sorry. Within the coming decade, PK and Orland will be the leader of energy transition in Poland and Central Europe. Power generation will be the key driver for a stronger Orland Group until 02/1930. We will continue to build our position by further growth of renewable and low carbon power generation business.
The growth of power generation will be based on renewable sources. So we plan major investments in offshore wind farm projects adding 1.7 gigawatts of capacity and onshore wind farms and solar PV systems adding 0.8 gigawatts. I mean, that our energy production capacity will increase up to 2.5 gigawatts in 02/1930, so five times more than the rest capacities in 2019. Complementing renewable power will be projects expanding the capacity of our gas fired power plants with plants located in Ostrovenkrap, possibly in Gdansk, but also in Lifino. So I'm talking about the new CCGT units.
Total gas fired power generation capacities of Orland Group should exceed two gigawatts. Simultaneously, we plan to expand our distribution assets, complementing them with innovative solutions such as pilot energy storage facilities that will help to optimize electricity distribution costs. Our target is to reach in Energy segment EBITDA at the level of PLN 7,000,000,000, so I think that we like PLN 7,000,000,000, which is more than four times higher comparing to the results from 2019. Total EBITDA generated by Energy segment in years twenty twenty one-two thousand and thirty is estimated at the level of, roughly speaking, 48,000,000,000. Till 02/1930, we're
going to
spend PLN 47,000,000,000 of CapEx. Our main target of Energy segment are presented on Slide 29. So now let's move to our retail segment, Slide number 30. Retail is definitely the most recognizable part of our business of Orland Group. So we are currently running 2,800 fewer stations across five markets in Central Europe.
Over the next decade, we will seek to expand our network, particularly outside Poland, to the level of 3,500 fuel stations. So this will help to consolidate our leading position in the region and provide a stable source of revenues. The share of fuel stations outside Poland should increase to over 45% in 2030 from current 37%. We are investing heavily to expand our non fuel offer at the fuel stations and beyond. We will launch retail outlets outside our fuel stations in Poland and The Czech Republic next year.
Seeking to the support for those plants, we have acquired RUG. We will also grow our network of parcel pickup points and e commerce business. We expect that these initiatives will deliver 50% increase in our gross non fuel margin by 2,030. Additionally, integration with Energal Group is a very good starting point in building comprehensive B2C and B2B service centers, covering such areas as fuel and electricity sales and through distribution of energy. We are also committed to provide advanced and comprehensive services.
We aim that our customers of fuel stations will be able to refuel a vehicle by CNG, LNG and hydrogen. We are set to have over 1,000 electric vehicle fast chargers by twenty third. We are constantly working to improve the quality of our services for customers, implementing best sales practice to boost the profitability of our business. Our target is to reach in retail segment EBITDA at the level of PLN 5,000,000,000 in 02/1930, which is more than 1.5 times higher comparing to the results from 2019. Total EBITDA generated by Retail segment in years 2021, 2030 is estimated at the level of 42,000,000,000.
Till 02/1930, we're going to spend, roughly speaking, PLN 11,000,000,000 of CapEx in the retail segment. Our main targets for retail segment are presented on the Slide number 31. So now let's move to Upstream segment, Slide number 32. We may say that sustainable growth of our Upstream portfolio should support our downstream and gas fired power generation business. In the coming years, we plan to carefully expand our portfolio of hydrocarbon assets focusing on natural gas.
We plan to increase total hydrocarbon production up to 50,000 BOE per day in 02/1930. By that time, 20% of Orland's group gas demand is to be covered from our own production. Therefore, our strategic goals are to optimize the Upstream portfolio following integration with Grupolotos and to focus on stepping up natural gas production. One comment, if the PG and IG acquisition is successfully completed, the business expansion materialized, we will review our Upstream portfolio. Our target is to reach in Upstream segment EBITDA the level of billion Polys blotters in 02/1930, which is more than four times higher comparing to the results from 2019.
Total EBITDA generated by Upstream segment in years twenty twenty one-two thousand and thirty is estimated at the level of PLN 10,000,000,000. Till 02/1930, we're going to spend PLN 9,000,000,000 PLN of CapEx. Our main targets for upstream segment are presented on the next slide, Slide number 33. So let's summarize our goals and move to Slide number 34. We may say that in 02/1930, Orland will be a multi utility leader in the region, bigger and more diversified.
In the refining, we're going to increase our throughput capacities from current 35,000,000 tonnes of crude oil per year up to 45,000,000 tonnes crude oil per year. Biofuel production will increase up to 2,000,000 tonnes. In terms of petrochemicals, of specialized pet chem products in our portfolio will reach, roughly speaking, 25%. We will also have installed recycling capacities at the level of 0.3, 400,000 tons. In energy segment, so power generation, installed renewable capacity will increase up to 2.5 gigawatts, and we are also gonna have, gas fired capacities at the level of two gigawatts.
In retail, number of fuel stations will increase above 3,500, fuel stations in seven markets and we will also develop very quickly a number of fast charging points for electric vehicles that may achieve in 2030 the number of 1,000. In upstream, daily production of hydrocarbon will increase significantly from current 18,000 BOE per day to even above 50,000 BOE per day. And as I've mentioned before, we would like to have covered our internal demand for graft at the level of 20%. You may say that node goals are ambitious, yes, but we will do our best to deliver them. But to deliver this growth, there is a need definitely for some major changes within the organization described on the slide number 35 up to 38.
So in line with Pick n Online strategy, organizational changes will be an integral part of each business segment growth. Data aim will be to streamline and speed up processes. We will increase spending on innovation, including green technology projects. They will play a key role in developing new areas of our business and our expansion towards increasingly more specialized products and services. Ultimately, we intend to spend 3% of CapEx on innovation, research and development.
This will amount to a total of 3,000,000,000 over the next ten years, putting us on a strong footing in relation to our peers. These funds will be allocated to the development of the Corporate Venture Capital Fund and our R and D center among other projects. A killer element of Online Group's transition will be digital transformation of its business, integrating all segments and internal processes. This will keep unlock the previously inaccessible sources of added value and better leverage of capacities and assets. We will deploy integrated and flexible digital solutions and substantially improve the efficiency of our production and distribution processes, reduce our environmental footprint, and foster customer relationships.
In order to support delivery of our strategic goals and integration processes, Online Group will implement advanced governance model. We will align it with the scale of our business, taking into account the various aspects of sustainable development. Our business growth and diversification goals require human capital with extensive knowledge and competencies. Therefore, talent and human capital development will be another prerequisite in the Orland Group transformation. We want to build an organization that relies on knowledge and versatile competencies.
Finally, sustainable development initiatives will be an essential part of our strategy. And I would like to elaborate a little bit more on this because ERG is on the rather of many investors, rating agencies, etcetera. So let's move to slide number 39. And here we may say that Orland Group set ambitious ESG and sustainable development, both supporting by implementation of its business strategy until 02/1930. As you may have already noticed, sustainability goals are integrated into business segment strategies.
So we are turning the challenges of climate change into opportunities for sustainable development in the new strategy by investing in renewable energy sources, biofuels, recycling and improving our asset performance. We also analyze our climate impact and adapt our business model to changes in the environment. The priority of this strategy is a well known commitment of the decarbonization strategy to reduce emissions and achieve climate naturality. The social side of ESG and our interaction with communities has traditionally been strong at Orland. So here we will strive for business excellence, improving local communities programs.
Orlan has important purchasing power in Central Europe, which we want to use to leverage ESG goals along the supply chain. The new approach involves strengthening sustainability management in the supply chain by monitoring ESG area, integrating environmental objectives and education on all the growth values and health as well as safety rules. We take pride of our strong governance mechanism. We want to now to promote the best ESG practices among our suppliers in the same way top companies in the world do so. Everything we do in Orland Group is underpinned by our values presented on the slide number 40, like responsibility, development, people, energy and reliability.
So that's all from my side. Thank you. And now I hand over to Michal, who will give you more color on financials. So, Michal, floor is yours.
Thank you very much, Konrad. Sebastian, regarding, Let's talk a little bit about financial foundation. So starting with slide number 42. You as you can see in our strategy, our ambition is to be one of the fastest growing multi utility companies in Europe. In order to achieve this goal, we have established a solid financial framework.
We have defined three pillars of our financial foundations for the next decade: efficient investment, sustainable financing and stable balance sheet. Let's dive into the details on this triangle. We have very ambitious investment plans for the next ten years. Our goal, our aim is to select the investment project which will contribute the most to the group's value. For this, we will invest only in the projects meeting our ambitious IRR criteria.
85,000,000,000 out of $140,000,000,000 of total CapEx planned for the next decade will be assigned to projects in new areas of the group's activity. Mainly strategic development and investing in the future. Sustainable financing is our second pillar. We want to be an active insurer of green and sustainable bonds, and we want to efficiently use an automatic funding source to respond. We maintain our past cycle throughout the whole period of the strategy with moderated debt level not higher than 2%, 2.5% net debt to EBITDA.
We will keep strong investment grade credit rating. This attribute tripping us, mainly efficient investment, sustainable financing and stable balance sheet. We call ourselves for the value creation of Olin Group. Our EBITDA at the end of the case will grow by approximately 2.5 times. Our royalty will reach double digit levels starting 2025.
Not only we want to create value to our shareholders in the long run, but we will also share our profits with shareholders on a annual basis. We'll pay dividend of nearly 3.5 per share starting 2021. Now moving to Slide 43. This one is presenting state of economics over the next decade. Approximately 55,000,000,000 will be invested in our current core business assets in the refining segment, fuel retail segment and energy distribution in order to maximize the performance and secure financial resources for investments in two other group of projects.
Strategic development projects will be critical for creation of the group's value over the next decade. Because of this fact, investments in particular, rather than zero emission energy sources and non fuel retail will constitute over 50% of our total CapEx. In those two group of projects, I mean, maximizing performance and strategic development, Our intention is to achieve the return on investment of at least three percentage point point above weighted average cost cost of capital, which we calculate individually for each segment and product time for the product, which returns are not regulated. We do not forget about the project, which will drive our value in the long term beyond the time horizon of the strategy. This is why we will invest around €10,000,000,000 a lot in new mobility, hydrogen technologies, recycling, R and D and digital transformation.
Slide number 44 is presenting timeline for key groups of for CapEx on key group of key groups of projects. Majority of our investment projects in our current core business are planned to be completed in the first half of this decade. Proper timing for this investment will be critical for the efficiency. Most of this project shall not be postponed due to the life cycle of traditional business. Investments in renewable and sustainable products will be realized throughout the whole period of
the strategy.
On Slide number 45, we are presenting more details about our balance sheet and funding sources. The stable balance sheet and well balanced funding structure will be the foundation for our growth. Our investment plans are well aligned with our financial capacity to resolve the period of the strategy. We estimate that we will be able to cover most of the investments and cash spendings with current operating cash flow within the next decade. In order to be efficient, we also plan to leverage our balance sheet to the optimal extent.
As I said, our goal is not to exceed 2x net debt at the duration in the long run with maximum level of 2.5x in short periods of time, especially when recording high accumulation of organic investments and major acquisitions. I would like to underline here that our base scenario for Lotus and Magniq acquisition and technical worries on the non GAAP basis. In line with EBITDA growth, our debt capacity will grow as well. We estimate that with the $6,000,000,000 growth of EBITDA in 02/1930, that debt capacity will be higher even by $40,000,000,000 $50,000,000,000 by the end of this decade. We plan to balance our funding sources through establishment of the NTM program in the first quarter twenty twenty one, which will give us a maximum flexibility in terms of timing and scale of bond issues on international markets, especially in euro market.
It is also our intention to be a frequent issuer of green and sustainable bonds, both from the domestic and foreign market. We will also actively use alternative source of funding in our activity, including limited records project finance, particularly in the power generation and both mechanical projects, EU funds dedicated to sustainable innovative projects and co funding of selected projects with strategic investors like we do, for example, in offshore wind farms. Potentially, we can also use hybrid bonds to the extent they meet rating criteria. Slide number 46. We will grow and diversify our EBITDA in a way which will make it more resilient to macro environment, mainly to increase of contribution of Pet Chem and Energy segment.
Both segments should bring additionally $10,000,000,000 block in total to group's EBITDA by 02/1930. We believe that more resilient EBITDA in combination with conservative debt level will translate to strong investment grade credit ratings. Last but not least, Slide number 47, transparent and stable dividend policy. We want our shareholders to benefit both from the long term value creation and from the short term cash flows. We come back to the previous dividend path next year.
We will pay at least three half of the shares in the following key years for the dividend to be at the same level or higher. That's all from my side. I can go over.
Yes. So I think, operator, that now we finalized the presentation, so we can kick off the Q and A session. So we are ready to take the questions.
Perfect. Thank you. We will now begin our question and answer session. If you have a question for our speakers, please dial 01 on your telephone keypad. Note you'll enter the queue.
Once your name has been announced, you can ask a question. If you find your question is answered before it's your turn to speak, you can dial 0 to answer your question. Our first question is from Mr. Katarina, Bank of America. Please go ahead madam, your line is now open.
Yes. Hello everyone and thank you
so much for the presentation. I have several questions. The first one is, you know, in terms of time frame of CapEx and EBITDA growth, I can see, you know, slide 44 where you you put you have put an, you know, illustration of the time frame of investments. In terms of the in terms of the, you know, numerical share of topics that can be spent before 2025. From this chart, you know, most of the investments already started in 2021.
So does it mean that your CapEx can go straight to, you know, 13,000,000,014 Polish zlot per annum from already from next year? And, you know, same question on on on the EBITDA growth. Understand that most you know, the EBITDA growth will be mostly backloaded, but what share of of the growth we can see before 2025? The second question on dividend. Do you plan to have a dividend policy in place that will, you know, that will that will have a formal, you know, progressive dividend policy of at least 3.5 zoloty per share or that that's been your intention to to to pay?
And the last question in terms of leverage targets, you mentioned two times in that to be there in the long term, two and a half times maximum threshold in in the short term as you go through the CapEx. If in case is that a strict target? In case you are approaching, you know, the your maximum target, can you scale down investments, or it will be more of, you know, a medium term term target and, fluctuations from year to year will be possible? Thank you.
So I can take the first question. Konrad Vazquez speaking about the CapEx. So as you said, the first half of the decade will be fully packed with CapEx. So the peak CapEx probably will be in 2024. Of course, we will, let's say, adjust the CapEx to the macro conditions and our financial possibilities.
In terms of EBITDA, you may assume that it will gradually grow over those, ten years. Yes. So taking into consideration that, some of the projects, to, let's say, to, deliver this, 26,000,000,000 policy, it must be done right now or never. You may assume that majority of those big investment projects will be a part of energy segment, PET scan, but as well as refining business.
Mhmm. And as regards to your other questions, I hope, Elisa, to ask about the dividend. This is our goal. We want to pay at least 3.5. Of course, the final decision belongs to the shareholders, but we want to provide our shareholders with a clear, transparent dividend strategy.
And at the same time, we want to keep a safe level of the debt, as I said, and you have correctly mentioned that it will be, in general, two times net debt to EBITDA. At a short time, short period of time, we've stimulated investments, organic investments of BIC and M and A, we can exceed this level and come up to 2.5 times net debt to EBITDA. I think we have a couple of tools which will enable us to keep this target. We can either shift some investments. We can use the link as records, project finance, and keep part of the investment of the balance sheet.
We can look for the partners to work together with us on some strategic investments. Last but not least, we can also consider hybrid bonds, which would also deleverage our balance sheet. So we feel confident that we can pay the dividend that we have described. We'll keep the fair level of the debt presented in this strategy and realize the CapEx plan at the same time.
Maybe one comment from my side. Please be informed that this presentation, so the figures based on the consolidation of PK Northern, Emerga and Lotto figures. It does not include PG and IGS due to the fact that PG and IGS is on the very initial stage of the process. So after we complete the PG and IGS successfully, the strategy will be updated.
Understood. Thank you so much. And if I may, you know, follow-up on the PG and IG. I mean, it looks like PG and IG doesn't really fit within your within, you know, your new 2013 and 2015 vision vision. You know, to what extent this transaction, you know, TKN again wants to do this transaction and is working to finalize it, or we may still see, you know, cancellation of the transaction given such ambitious investment program ahead of the group?
Okay. Thank you very much for this question, Karyavovov here. We wanted to make this strategy open for PG and IG. So in the value maximization part or in the value value maximization field of play, we included energy and gas distribution as our our area. We focus on gas upstream in our upstream section.
So we we want to keep the strategy open for PG and We do not cancel the process. And as as Conkat said, we are now in the initial stage of of acquiring the approval for QGNID acquisition, and we want to update our strategy when we will be more advanced or when we will when we will help October.
Understood. Thank you so much for your answers.
Operator, we are waiting for the questions.
Yes, sir. Are you still on mute by any chance, Mr. Patricot?
Yes. Hello, Cesar. Patricot from UBS. Sorry, today was my turn. So thank you again for the update.
Couple of questions, please. The first one, just to follow-up on the financial framework to clarify. So in terms of the flexibility in the framework, it sounds like if the macro turns out to be weaker than expected, then you look to let a little bit of rise to 2.5 times and then you'd look into postponing some projects, if that's correctly. And then conversely, what happens if we see stronger macro than you expect? Does that mean then faster even growth would you return that excess cash flow to shareholders?
And then secondly, I wonder if you could give us a bit more details around growth that you expect in petrochemicals, which is the largest contributor with our generation. Looks like a good part of it is driven by much higher benchmark margin. So wondering what's driving this bullish expectation around the model petchem margin, especially in the late part of the 2020s? And if you can give us an indication perhaps around the volumes growth that you expect in petchem? Thank you.
So let me start with your first question, Hertelic. Yes, your understanding is correct. We can consider shifting to some investments if the macro will be not as we are expecting to be in order to pay the dividend. And regarding your question whether the dividend can be higher, if the macro is correct, it all depends whether in the past, we will need to shift some investment or not. So we have to look at it in total, but we want to communicate and we want to give an assurance to our shareholders that it will be not less than 3.5 loaded per share.
If we are able to generate more operating cash flow and year by year, then we can consider higher dividends in all those decades as well.
Wojtek, can you take the second question?
So with regards to the macro assumption to the petrochemical business, weaker assumptions for the short term to the weak term. This is the way the situation is also new, but by all the market players now. On average. So we assume the market to be, we will be quite constant. And this profitability results from from the funds of the business is cyclical and the growing, growing business and the growing demand for petrochemicals, the pricing of the product needs to be high enough to to get financing and get approval for the growth of the EP line.
When the growth projects are realized, then we see some macro expect compute 10% of increase in the in the fourth month. But what is more important, we would like to first build some petrochemical, based products. So we build the value, build the the volume of basic petrochemicals, and then expand the basic petrochemicals into advanced over advanced petrochemicals and into polymers. The in the the product value, the higher the margin, the higher the profitability of the project. The more advanced you would like to be, it is more difficult to to get there.
You need to get the the technology. You need to get the market. And what I can say here is that we do perceive each of the growth projects all from the from the the own projects. So from the, let's say, our own projects for growth,
Thank you very much.
Thank you.
Our next question is from Igor Your line is now open.
Hi. This is Igor Kuzmin from from Morgan Morgan Stanley. So thanks very much. First question for me is, would like to just clarify in terms of the dividends. Is there any scenario under which the dividend can fall below the 3.5 for per share?
Or is it basically unconditional no matter what happens to the macro situation or the CapEx intensity or whether you're going to acquire PG and G at price above or below the sort of targeted levels or desirable levels. So I just want to make sure how solid this floor is 3.5 Polish value per share. If there's any scenario I would like to possibly possible to explain whether it potentially might unfold. The second question, I would like to just to maybe understand a bit in terms of the covenants gearing clear, the gearing targets clear. Can you just maybe explain a little bit what are your covenants and what are the impacts of the thresholds and on what, parameters this is based on?
Another question I've got is in terms of the, upstream business. So your business is getting bigger. That's clear. Do you feel strongly about retaining the upstream business, especially given your focus on decarbonization and given the focus of the markets on cleaner businesses, etcetera? So refining your core business, downstream your core business, that's great.
But in terms of the upstream business, really need a how do you see the sort of some of the upstream businesses which are potentially not really fully integrated like the business in Northern America, for example, etcetera? Do you foresee the scenario where potentially you guys can dispose those businesses? Or is it difficult to say now? So these are three questions for me. Thanks.
Okay. So we don't see a scenario under the current strategy that we don't pay the dividend that we have declared here. Something dramatic would need to happen on the market, but that would probably force us to review the whole strategy, not only the dividend strategy. So in this under this under due to the agreement, we don't see this scenario negative enough to not to pay the dividend in the amount that we declared. As regard to the leverage, I understand you want more details about the components, yes, how we are calculating the net debt and the EBITDA, yes, is this correct?
No, no, no. Sorry, just to be clear about covenants. Do you have any sort of specific covenants attached to this target, like on your any credit lines or bonds, etcetera?
Well, in terms of bank covenants, the maximum level we have is 3.5 times EBITDA. And our rating agencies, they claim they would like to see us below two, two point five times the EBITDA in order to keep rating at the current level. These are the thresholds we have.
Okay. Sorry, 3.5 times EBITDA, sorry, what is the
Yes, net debt to EBITDA. It's
2019.
Okay. Got it. Thanks.
And regarding your first question on upstream business. During the strategy, we worked under the assumption that we have our upstream portfolio at Orlan. So the portfolio that gives us about 20 kilo boa daily and and portfolio of lot of which is of of similar size. And we are aware that when we are talking about integration with portfolio PG and IG, which is two, two and a half times larger than combined portfolio of of portfolios of ORAN and ZOTUS, then the level of ups upstream presence would be would be very different. So our strategy now is to to focus on on this portfolio that we have, to focus more on next to call gas, and to revise or to prepare a new strategy for upstream portfolio after acquisition of PG and E3.
Okay. Thanks.
Our next question is from Oleg Gabou, Raiffeisen. Please go ahead. Your line is open.
Yes, good afternoon and thank you for the presentation. I have few questions. First, let's say a group of questions. Ten years is a long period of time. Therefore, I wonder if you have any and are willing to share with us any of your intermediary targets that would help us better assess your 2030 strategic objectives?
For example, it would be useful to know how much of the growth projects that you target have already or are close to a final investment decision. Just an example, can you talk more about your growth ambitions in the renewable energy generation? How much of the targeted 2.5 gigawatts should be developed over the next five years? The second question refers to your macro assumptions, which, at least in my opinion, look a bit optimistic and above the current market consensus. It would be useful if you could present us sensitivity analysis so that we understand how would the projected EBITDA be impacted by the change in the macro macro environment.
And rather a follow-up on on on dividends. Still, I'm sure I fully got it. Provided that you are successful in acquiring the PG and IG, what be or what kind of impact should we expect on the targeted dividend of 3.5%? Would these acquisitions rather allow you to revise upward your dividends? Or can it put a pressure and force you to lower this level of 3.5% minimum dividend?
Let
me start with the last
question. As Carlo mentioned before, we will be closer to the PG and IG acquisition. We completed this acquisition. It will require us to revise the whole strategy, including the dividend strategy. So this strategy is not covering PG and IG acquisition.
So the dividend policy is also not covering the PG and PG and IG acquisition. So once we will complete this acquisition, we will review all the strategy and the dividend policy.
Okay. And building on that, answering your first question about ten year horizon. We wanted to show longer horizon for the first time of became of Oregon Group because we are aware that challenges that are in front of us are challenges that require long term investments and long term investments done. But at the same time, we we are consistently planning power planning, of course, short shorter shorter terms. And what what is important here is that we want to cyclically update the strategy and update update update our the friction the case.
And as we said as we as we did it earlier, okay, one, two years, two years. And and currently, current market environment
is
very difficult to forecast insurance short term. So all all the factors that are implied by COVID pandemics and market short term market trends make it very difficult to plan for one or two years in advance. So that's why we haven't decided to show the short term target at this time.
Our next question is from Thomas Plattropp. Please go ahead. Your line is now open.
Yes. Thank you very much. Good afternoon.
I think most of my
questions were answered already by you. Only two remain on my side. Hello?
Can you hear me well?
Yeah. Yes. We can hear you.
Okay. Great. So I
got only two quest I got two questions only. The first question is, is your strategy includes disposal of the assets? Does it include the potential impact from the sale of those assets, which you should do when you merge with local group? That will be my first question. And my second question is that it's still not clear for me why you come up with a strategy without the PG and IG and why you come up with a new strategy potentially a year from now if everything goes well and you acquire PG and IG.
Can you shed a little bit more light about the rationality to issue a strategy right now? Thank you.
Trying to second question about PG and AG. The old strategy was a bit outdated as we wanted we wanted to do share our view from from current perspective. And at the same time, as we as we said, we are too early to to show to show the picture of our business with with PG and AG. We we wanted to we wanted to to have more details on on on the business.
And regarding to your first question on disposal on disposal of of assets, we do not exclude that, but we haven't we haven't made any decision so far. Yes.
We don't have any specific disposal. It's not in our base case scenario in this strategy, but as as Caro mentioned, we we do not exclude.
Okay. And when did you calculate your target? Did you include those assets which you have to dispose due to this merger with Reuters? Or are they excluded from this estimate?
This this assets that are default in the process of implementation of are included into into the into the.
I'm sorry. You say
you assume that you could keep those
assets, but am I am I correct with this? No. No. No. We mean that we take them into consideration.
Exclude them from calculate the harvest. Yes. Okay. That's clear then. Thank you very much.
Our next question is from Mr. Czochowski, Citibank. Please go ahead. Your line is open.
Good afternoon. It's Czochowski from Citibank. I have a couple of questions. So the first one is on on the dividend. I have to come back to this one.
So correct me if I understood it correctly, Garely. You have to now make a share swap with Picnic, and you say you promised to pay 3 and a half zloty up until this transaction happens. And and thereafter, it's it's quite open because you work on your strategy. And in this context, what is your thinking given lot of will be the subsidiary? Will you keep paying dividend out of lot of or up until transaction and thereafter minorities cannot come on the path?
So that's the first question on the kind of a dividend in the context of this deal.
Okay. So Piotr, yes, you clearly understand that once the transaction with PG and I team will be concluded, then we, of course, have to return to the dividend policy because at the moment, we don't know precisely how the transaction structure will be, and it might be that it will change also the number of shares we have. So because of that, we we we need to then revise the the the strategy, but it is our intention to keep paying the dividend, later on. Yes.
And why did you decide to pay three and a half lot in? What are justifies this amount?
Because we we recognize the need to continue the part that we initiated before COVID comes and that was the starting point for us.
Okay. Also have a question on strategy because in your presentation, you say that you want to be leader in sustainable business, play energy transition, and have a carbon neutral company. And yet when I think about PKM structure with PG and I, assuming that happens, how much of your business in ten years from now will be exposed to CO two related to upstream power generation, refining, and so on? And and how do you feel that it'll be a right amount, you know, or 30? And then on the same subject, at what point in time do you think Moshe EcoNAFTA can actually stop operations because of the energy transition process?
Is there any time point in your such a thinking that you don't you no longer need this after. We will no longer need it.
Okay. Thank you for this question. Regarding regarding our decarbonization and and flexibility, as we felt we want to achieve a target of 20% decarbonization of our current scheme, current assets by 02/1930. And we want to do that via via energy efficiency and renewable energy. In our strategy, we want to strongly increase the share of renewable energy in our portfolio.
We want to increase the the installed capacity of renewable energy five times to 2.5 gigawatts, and and we want to focus on on that direction in in coming in in coming years. At the same time, we want to treat to treat the oil and gas gas business as as a source of of profit for for financing financing this investment. So as you can see, this is this is another transition strategy that will allow us to build further on on the carbon neutral businesses after twenty twenty thirty. So so we show we show the path how we want to to achieve that.
And regarding In terms of in terms of Orland Itova, so Moshe, yes, we always clearly said, this is one of our key assets. 50% of import of the diesel done by PK and Orland comes from Orland Itova, and our aim is to strengthen Orland Itova position by doing investment in in hydrocrack cracking installation. Of course, how big this investment
I'm sorry to interrupt. This I understand. I understand the logic what you say. I'm just asking. If we have an energy transition and we have a car on zero at twenty fifty, there must be a point that
we should shut it off.
And I just ask you, when is the point you're going to, face this decision? Or you don't think about it, you think you kind of can create some pet chemistration next month, next buy and then it will work forever?
In the horizon of the strategy in ten years, there are no such plans to dispose the stuff.
Okay. And then two last questions from my side, please.
I just want to touch on this.
You are you targeting double digit returns on invested capital in the second half of the decade, and big part of your investments actually go towards renewables. And the main lead renewable development in Europe actually say they're coming to low single digits, whether that's offshore, onshore, or solar, you know, very commoditize market. How what gives you confidence you can actually outperform the piece by such a high margin or a new investment that they're going to be double digit? And what are the other areas where you see such strong double digit returns? Well, you are right that
we will most likely not be able to reach double digits in revenue variables. But please remember that we are talking both about the monthly investment in other segments and about our current assets, which are also generating a substantial part of the profit. So it will take into consideration both current assets and the future investments in other segments, for example, TET Chem or CTGP energy production sources, which are able to generate double digit returns. Okay. Thank you very much.
Our
next question is from Michael Korsak, Tregant. Please go ahead. Your line is now open.
Yes. Thank you. I have three questions. Maybe the first one, you presented forecast of model refining margin that amounts to $4.9 dollars per per barrel since 02/1926. Am I right that this does not include differential?
And why did you assume higher than long term average margins in such a tough environment in the following years?
Okay. From Wojtek.
Hello, Ivan. So just to confirm, the refining margin has
Okay. Maybe the second question. In petrochemicals, just last year, you had 2,300,000,000 EBITDA in in the segment, and it is going to increase by 1 and a half billion due to previously announced 8,000,000,000 CapEx. And in strategy, you assumed 7,000,000,000 EBITDA. So we have over over €3,000,000,000 gap in operating results.
And could you explain more precisely what is the macro and investment effect? Is projected model margin strictly a result of higher yield of more specialized products?
So basically, the numbers we refer to are the numbers that include the petrochemical development now in the midyear protection period, but there are much more projects included included there. So, first of all, we can we have the expansion of basic basic petrochemicals as we as we announced, and this is this is all the things and some more. Then we have advanced petrochemicals, they include the information to project as budget the petrochemical and chemicals and products we have in the region. So assuming, if if you agree that that we will see the petrochemical product demand to grow, first thing. Second thing is that you see the have with integrated assets that we have been already present on some of the markets, some of the others we need to come back and we need to get.
This is true. This is kind of a challenge, but still we have some few strategies in analytics, according to like our own products and AI products. So if you look from from this perspective and that we have, you know, we have plenty of options. And and taking granted of those projects, we we are we we have the best ones and the best ones to implement with the product.
So answering directly your questions, 7,000,000,000 PLN generated by Pet Chem segment in 2030 includes 4,000,000,000 from initiatives and the rest is from the core business baseline.
Thank you. And the last question, if I may. What is your forecast of Lotus EBITDA and its result in refining in 02/1930? The same question concerning EBITDA of Energia assets because you presented EUR 4,000,000,000 EBITDA from acquired Lotus and Energia, but I think it is last twelve months clean results, but not projection for in the following ten years.
We we've counted for $44,000,000,000 billions of losses to cover, but we don't want to disclose precise numbers for particular companies.
Okay. But it's previous results, so last twelve months, or is it a protection? Protection?
It's never come from years. Okay, thank you.
Our next question is from Robert Ipopema Securities. Please go ahead.
Yes. Thank you for my question. Robert May from Ipopema Securities. Around the dividend, if you can cast more color on that. So I understand that dividend from 2020 will also amount to 3.5 slots.
And can you provide a split between what amount of this dividend will come from the free cash flow and what amounts would come from that? Because see that the after the Anadarko acquisition and the EBITDA among the COVID times is a little bit stretched. Could you provide such a split?
You are correct. It will be 3.5. No. Actually, it's not possible to give you such split because on one hand, you have several elements and, like, there's dividend, very good CapEx spending, interest rates, tax spending, etcetera, etcetera. And on the other hand, we have a corporate, you know, we have a operating cash flow and and the corporate debt, which is not assigned to any of the elements on the other side.
So Mhmm.
So maybe I can I can I can carry on with this question and and ask you some more going forward?
Sorry. If you're asking whether our debt will go up next year, it is more like most likely it will go up.
Okay. And how long can you
pay actually €3,500,000 from debt going forward? If, for instance, the macro conditions are worse than you have assumed cover the dividend from the free cash flow,
for instance?
It's all Have you made It all it all depends on the on our investment plan, how fast it will be realized and what kind of funding sources we will use to to to make it. So we have Mhmm.
So I understand understand I that the investments are more a priority for you than the dividend. So if the macro conditions are worse, then you will prioritize the investments rather than the dividend.
I didn't say that. We mentioned at the beginning that we will be flexible in terms of investments and the way of financing them also in order to make sure that we are able to pay the dividend. That's what I said in the beginning.
Okay. And what happens with the dividend if the net debt to EBITDA goes above zero or
even higher?
Are you still going
to pay three three point five?
No. No. We will we will manage in a way not to be in a situation that our net debt is 2.5 or higher.
And my thinking is just what would need to happen for PKM not to pay 3.5% dividend per share. So I just wonder where the net debt to EBITDA would need to end up or, yes, or how long you can pay it from the from from from that purely. This is just a broad thinking Because obviously
We have a couple of variables of the type of risk. We have maximum
net debt. We have investment plan of the CapEx, which we can influence, and we are deciding what to invest and when to invest and how to finance it. And we have a dividend policy. And it's our managerial responsibility to pay the dividend that we are declaring.
Okay. Maybe on on on Medgar tender offer because it it turned out that you were unable to buy enough shares to make a squeeze out. So right now, NEGA is still a decent company. What what happened next year with NEGA shares and and your tender offer?
So the tender offer has just been settled, so we acquired this 100%. And the next step is the delisting, actually, for the shareholders for the shareholders, without fully quick shares on the stock exchange. And and and that's the case, actually. And the rest, well, everything depends on the prospects of the merger going forward and the discussions with the stockholders. But at that stage, you know, we are not discussing internally some major steps with regards to the shareholders.
So the next step is the the listing and the integration with PKLO. That's that's the case.
Mhmm. And maybe last question from my side. It's almost end of twenty twenty. Do you know maybe more about the or maybe you can tell us more about the shape of the future transaction with with Lottos and PG and IG? What should we expect here?
Especially in terms of Lottos, I mean, is tender offer on the table? Or are you going to enable a share swap? What should we expect as more likely scenario?
Yeah. Well, unfortunately, there is nothing more to say comparing to our previous discussions, but our goal is to limit our threshold. That's for sure. Nonetheless, at this stage, it's so difficult to comment on the ultimate structure of the transaction. So I would rather expect that the transaction will become more and more clear in Q1 next year, actually.
Our
next question is from Igor Kuszny, Morgan Stanley. Please go ahead. Your line is now open.
Hi. Again, this is Igor Kuszny from Morgan Stanley. So first question I have three more questions. They are not very long. First one, your Slide 10 on the presentation, EBITDA target for 02/1930, EUR 26,000,000,000 versus EUR 9,000,000,000 EBITDA in 2019.
The difference is about $17,000,000,000 out of the $17,000,000,000 would we be able to guide how much of that in percentage terms and off is due to your macro assumptions? And how much of that is due to the sort of inherent improvements in the business, whether they are organic or inorganic? Maybe you can split that as well. So that's question number one. Question number two, going back to the PG and G schedule impacts on the dividends.
So perhaps maybe I'll ask that question in slightly different way. Your guidance is $3.5 per share in terms of the dividends. If the G and transaction goes ahead, would you foresee the absolute amount of dividends in total amount, not per share, but in total amount, potentially, is that scenario that potential amount coming down? Or the total amount, which is implied by the current number of shares and 3.5 Polish orders per share is unlikely to go down. So we don't know what's going to be the dividend impact from PG and G transaction, but if number of shares will change, at least, you be able to defend or stand by the overall dividend commitment in absolute terms overall?
And third is the question about Slide 45 in your presentation. I was just wondering, there is a chart there. So on the left hand side, you showed three buckets, investment, dividends and taxes and other. Would you be able to comment what this EUR 25,000,000,000 is about? Thank you.
Yes. So regarding the dividend, having in mind the leverage of PG and IG and the fact that our preferred transaction structure would be a noncash basis, the merger with PG and IG would theoretically improve our leverage and should make the payment of the dividend easier than without it. So I don't assume that we would pay lower dividend in terms of nominal following the acquisition of the PG and I. But as I said, I would not like to refer to the dividend strategy post PG and IG acquisition because we were not analyzing it for the sake of this strategy. So I hope this comment
would Yes. Be very
Thank you. And the last question was for the €25,000,000,000 on the chart. Yes. So for example, interest interest rate we have here or CO2 emission rights spendings, which are also here. Understand.
Thank you.
And regarding to your first question, please, on macro and other growth factor. It very depends from from segments. So so what's what we calculated is is the split of EBITDA on on different segments. And as you can see, the energy energy and pest can segments are here at one of the fastest growing segments that's to determine our our key strategic strategic growth. So we do not we do a thing that it makes a unified number for total order group here of share of much going back or other factors would be very helpful for you.
Our next question is from Mr. Czubczewski, Citibank. Please go ahead. Your line is now open.
Because you are on mute. Cannot hear you.
Apologies. I have three very quick follow ups on Telco. So I don't you don't seem to you didn't seem to answer my question about the lot of dividends. So can minorities of lot of count on the payouts over there? Assuming that's one phase listed, We are not clear whether the minorities agree on the on the transaction.
And then on the 4,000,000,000 contribution from Energolotos, I didn't actually quite get what is this number representative of. Is this like a just a historical contribution or so pre kind of pre delayed coker award or this is a a future estimate of the business? And then it's how would you quantify the disposal of 30% refinery and then synergies? So can we actually get the normalized figure of what the uplift would be assumed to Lotus and NEGA combined or etcetera?
Okay. Good. So we usually expect our subsidiaries to pay the dividend to accumulate the cash on the P and L and L level. So this will probably be the case also as regards to Lotto. So yes, if there will be operating cash flow generated positive and the space will cannot put the dividend, we will expect to put the price of the dividend.
And this EUR 4,000,000,000 contribution, which you assume, is it pre-thirty percent disposals or pre remedies? And what are the synergies in your forecast?
So in general, we made some assumptions with regard to remedies, and, of course, to some extent, raise some more internal discussions, the synergies. Actually, as my colleagues said, you know, we wouldn't like to split that number into the to companies. But I would say, more or less, you know, it reflects the historical average of both Energia and and and Globus to Pakistan. So that's And the
can you also, as the last thing, take me the bridge between the $3,100,000,000 net gain in retail segment and $5,000,000,000 in ten years from now? You are going to add a good 20% of stations, so there's a good chunk coming there. And then you also discussed in press the different delivery services, retail chain. So can you explain why the growth hasn't been really as aggressive as other divisions?
Okay. So in the retail, we have some key assumptions for the EBITDA, and we would like to maximize the income on our core operations there. We also expected that we can expand our network by roughly 700 new stations, maybe organic way, maybe some of many transactions. We will see what's what's available for us to expand on our markets where we are operating in, but there is a big chunk right there. I also have some some plans to, you know, to build new business models and ecommerce and online perspective.
So we have some ideas regarding the overtaking rule. So we strongly believe that we'll be able to increase our gross margin there of the gross margin and But I'm asking
about something different. So last ten years, this business has grown from 800,000,000 to 3,100,000,000.0. So there's a 2,300,000,000.0 uplift in the last years. Now you're going to spend a lot more money on this business now every single year according to the presentation. And yet this business is about to grow a little bit less than than last ones.
And so it's is that kind of conclusion fair that you see a top of the possible margins that you can generate on the current asset base? So, Piotr, basically, we
will put most of our CapEx in new businesses, new projects in petchem and in energy sector, which means we expect to develop much faster. And we are supposed to earn money right there as a retail. Retail is a very good segment. It's quite a saturated here in Poland, and further growing of this segment is much more difficult for us than building up new lines for pet care, for example, or energy sector. It's not like we reached the limit because we are going to expand new ways and new formats to increase our margins there.
But this this market is, as I said before, quite saturated, and it won't be as easy to expand organically. It might turn out that we'll be able to increase for other means within that segment, but it is what it is. We strongly believe that increasing EBITDA in the next ten years from 3,000,000,000 to almost 5,000,000,000. It's not
a bad achievement after all. So And we also we also need to think that that we keep the current profitability because you know very well that the retail segment, in general, is changing very rapidly, and there are a lot of innovations that are on the market, customers, not only I'm talking not only about the fuel, but more fuel retail segment. So we have to be innovative. We have to change ourselves. We have to adjust our customer needs, and that requires investment and the investment also to keep the current high profitability of this segment.
Okay. Thank you.
Our next question is from Anir Pikorsky. Please go ahead. Your line is now open.
Hello, guys. Thank you for the presentation. Anir Puporsky, so nice to hear. I would like to ask about CapEx on the beginning of the Q1 discussion conduct highlight that the expected peak of CapEx in 2024. Can you please put some light on this statement?
Do you expect the CapEx of about 20 in 2024 or inside '23? And basically, what kind of projects you are doing in during this CapEx in 2024? That's the first question. The second question is kind of related It's about free cash flow.
So I would like to ask if you expect to generate a positive free cash flow in any of years in the first half of the strategy, so 2021, 2025? And how much you can actually expect to generate in total along this year, so 02/2025? The third question, I would like to just ask about the dividend. Sorry for so many questions about that. I would like to confirm if I understand you correctly.
So, basically, right now, we should expect 3.5 low grade per share for the next one or one or two years. And later on, when you if you'll be able to acquire PG and I, you'll expect the strategy update and you'll set a new dividend target. So the the current dividend so your current dividend ambitions are correct until you made the update of PG and AG? Thank you.
Regarding your first question, yes, as Pankaj said, we start many new projects in the first half of this decade, and we we expect the peak of our CapEx investment accounts 2040 2024. So so this is this is the conclusion that that this is that is important here. But we cannot now say about the size high of the CapEx. It it it will be it will be adjusted to our, as we said, to our current current market environment and our current conditions.
So as always, we'll present the details about next year CapEx with publication of fourth quarter results. So at the February, we'll be able to give you more lights on the 2021 CapEx. And regarding your second question, yes, you are right that CapEx over the next five years will be higher than free cash flow. That's why I mentioned that it will be our responsibility to manage the CapEx level over the years and to apply such a financial tools like limited recourse project finance or attracting EU funds to finance part of our investment, to find the partners to finance to co finance some investments. I also mentioned that we are open, and we are ready to consider a hybrid bond to deleverage, ourselves over this period.
And, yes, it's gonna be challenging. Nobody said it it will be, easy. I mean, we need to transform ourselves. The market is requiring it from us. Our shareholders are requiring it from us.
On the other hand, we strongly believe we really believe that we should be an attractive dividend company at the same time. So it's gonna be a challenging five years in front of us, but we have at least couple of scenarios that we can, you know, reach the target that we are showing to you, and we really feel confident that we will hit our first within the financial framework reports presented today.
Okay. But in the strategy, you expect your top line free cash flow from this ten year period to reach 55,000,000,000 loaded. So, basically, if you deliver, let's say, zero free cash flow in the first five years, do you expect to deliver on average 5,500,000,000.0? More than billions of free cash flow in the in the second five years? I
didn't get that.
Because in top of the strategy, you said that you will deliver 55,000,000,000 of free cash flow through this year because it's $195,000,000,000 of operating cash flow, it's $100,000,000,000 of CapEx, so it's $55,000,000,000 of free cash flow in ten years. But right now, in the first five years, you will have high CapEx. EBITDA will be not priced to the level to cover the CapEx. So you will not you will not generate the positive free cash flow in the first five years. So you don't remaining five years to generate the $65,000,000,000 of CapEx.
So that means that you will have to generate $10,000,000,000 of free cash flow. Is that correct?
No, we don't have a split over the first five years and the second five years in the presentation. We didn't say how big will be the gap over the next five years, yes? And for example, the alternative funding sources we can apply mainly over the next five years.
Okay. Okay. Thank you. And about the dividend, so I think that we should we can be certainly sure that the 3.5 is not for the next one or two years? And if you will be able to acquire PG and I, that may change, and I will send a new target.
Am I correct?
Yes. You are correct.
Okay. Thank you very much, guys.
We haven't received further questions. I will hand back to the speakers.
Thank you, operator. If there are no more questions, I would like to thank you for participating in the call. And this concludes our call. Thank you very much and take care.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.