Enerjisa Enerji AS

IST:ENJSA.E

Earnings Call Transcript 2023-Q4

[Çigdem Asil, executive]

Dear investors and analysts, this is Çigdem Asil, Investor Relations Process Leader speaking. Welcome to Enerjisa Enerji's Fiscal Year 2023 Earnings Results Call. The call will be presented by our CFO, Dr. Philipp Ulbrich; and Treasury, Risk, Investor Relations and Tax Director, Cem Gökkaya for 30 minutes. Thereafter, we will open the line for Q&A.

Before starting our presentation, I would like to remind you about our disclaimer on the forward-looking statements and highlight that we will present the 2023 results, both with inflation accounting and without it. As you all know, Public Oversight Accounting and Auditing Standards Authority has decided to apply Turkish Accounting Standard 29 in Turkish Financial Reporting Standards as of end of 2023. However, since we set out our guidance based on figures without inflation accounting, we are presenting results of 2023, also without inflation accounting in order to provide our investors with a holistic and corresponding view on our financials. Just last Thursday, the Capital Markets Board gave its approval for this method of presentation. On our homepage you will find the earnings presentation as well as the full financial statements with inflation accounting.

Now, I would like to give the floor to our CFO, Dr. Philipp Ulbrich.

[Philipp Ulbrich, executive]

Thank you, Çigdem. Good evening, everyone. I would like to welcome you to our full year 2023 financial results call also from my side. Let me share with you our key messages first. We achieved a strong operational and financial performance despite the difficult environment in all 3 segments. 2023 operational earnings without inflation accounting grew by 38%, meeting the upper end of the guidance. Also, underlying net income is delivered at the upper end of the guidance, standing at TRY 5.8 billion non-inflated.

Investments more than tripled, reaching TRY 15.7 billion, even exceeding the guidance and ensuring the company's profitability in the future. Free cash flow after interest and tax stood at minus TRY 12.9 billion, mainly driven by this deployment of capital to profitable investments and a temporary mismatch between energy costs and tariff without P&L impact and also being cash neutral over time. Leverage ratio is still at a very moderate level of 1.4%, providing headroom for further profitable investments. Please be reminded that the ratio is artificially high as we are showing earnings from distribution investments only from the year following the capitalization and the financing. Our dividend proposal to AGM of TRY 279 per share implies a payout ratio of 98% of UNI with inflation accounting and approximately 60% without inflation accounting.

Before we dive into our financial performance and outlook, I'd like to frame our results within both the global and local environment that have shaped our operations in the past year. The earthquake that hit Türkiye and Syria in February was a major disaster. Our hearts are and will be with everybody affected by this tragedy. One of the most impacted areas was within Enerjisa's Toroslar region, where we sadly lost 17 of our colleagues. We remember them with grief and respect. The physical destruction caused by the earthquake was immense, almost completely destroying the infrastructure we manage in Hatay and its surroundings. We continue to provide safe shelters for our employees. We support local communities and we are committed to rebuilding a stronger and more resilient infrastructure there.

Globally, 2023 has been a year of economic recovery phases. Locally, in Türkiye, the journey through 2023 has been especially about managing the impacts of high inflation rates and spending deficits as well as stabilizing the national currency. This environment impacted operational costs, escalating them beyond official inflation rates and led to a significant increase of interest rates for accessible funding. The general elections in May created an additional level of uncertainty around these macro policies and regulation. I am very proud to be able to say that, through hard work, proactive risk management and strategic foresight, we have achieved to mitigate these challenges, ensuring our financials remaining healthy and our growth trajectory remaining robust, both in line with our long-term objectives and pledges.

Certainly, the challenging environment prevails and the Enerjisa team thus remains fully engaged in identifying solutions to refine our operational efficiency and ensure competitive financing. Let me, as an example, refer to the five-year, USD 100 million equivalent loan from the EBRD, indexed with TLREF, we obtained a couple of weeks ago. Despite the challenges on access to funding for Turkish corporates, Enerjisa has been able to invest into its distribution grids 180% of the regulatory allowance in 2023, showing its commitment to meeting the needs of its customers and certainly also reflecting our engagement in the earthquake regions.

Like many in our industry, Enerjisa also had to navigate through the complexity of an energy landscape significantly shaped by regulatory and governmental policies. A notable aspect of this landscape in Türkiye has been the government's intervention in electricity pricing through subsidies, aiming at decreasing the cost-of-living pressures for consumers. While these measures reflect a commitment to social stability, they also present financial and operational challenges for energy providers, including an impact on our gross profit margins. We have been able to compensate for this once more in 2023 and will also do so in 2024.

However, let me clearly state that we expect a return to cost-based electricity prices as the highly subsidized system is not sustainable from a macroeconomic perspective and certainly also not setting the right incentives to meet emission targets. As we present today our 2023 performance, it's important to recognize that these global and local contexts, they have not only shaped the challenges we faced but have also highlighted the resilience of our team, the strength of our business model, and our commitment to delivering value to our shareholders and stakeholders alike. I can full heartedly state, after being with Enerjisa for 9 months now, that I am proud to serve this company, my almost 11,500 colleagues and our customers.

One more technical note at the end of this introduction. As mentioned, inflation accounting was introduced at short notice. We have been able to provide our year-end financial accounts following our initial schedule. Even many details were clarified by the regulators only during the closing process. In the next step, we will translate our planning for 2024 into the new accounting framework and present to you our guidance as last year with the Q1 2024 earnings call.

Now since this is the first time we are explaining our inflation adjusted figures, we want to give you a simple understanding on how Enerjisa's main financial KPIs are affected by it. Inflation accounting adjusts the values of non-monetary asset, liabilities and earnings, while the values of monetary items, such as cash and debt remain inherently the same. It is regulated internationally by IAS 29 and locally by TAS 29. We will use the terms inflation adjusted or IAS 29 throughout the presentation to denote inflation accounting.

As you can see in the upper part of the graphic, all operational earnings items are escalated from the months. They are realized to the end of the year with the relevant inflation rates. This leads to additional TRY 6.2 billion of operational earnings. Of the total escalation difference, TRY 3.2 billion is related to CapEx reimbursements, which fall outside the P&L. The remainder is subsequently offset in a lower line item called monetary gain or loss. Therefore, neither element impacts the P&L's bottom line.

In the balance sheet, all nonmonetary items are escalated with inflation, and any difference this escalation creates between the totals of assets and liabilities is recorded as a monetary gain or loss in the P&L, which then, through retained earnings, is reclassified under the equity section, thereby restoring the balance of the balance sheet. In Enerjisa's case, most of the escalation difference comes from the fact that the financial assets arising from our distribution investments, which are of major importance for us, are treated as monetary assets and are thus not escalated. However our equity which is higher than our non-monetary assets are both escalated. This creates a TRY 2.4 billion delta, negatively affecting our underlying net income.

Coming to the financial highlights in 2023, Enerjisa Enerji showed, once more, a strong operational and financial performance and is delivering on its targets despite the challenging environment. Operational earnings of Enerjisa Enerji not adjusted for inflation, compared to last year, are up by 38% and stand now at close to TRY 20.8 billion, mostly driven by increases in distribution financial income and CapEx reimbursements, as well as the gross profits of the retail and customer solutions businesses.

The main effect that reduces operational earnings is the increase in operational expenses in the distribution business, especially personnel costs, rising more than inflation. Similarly, CapEx unit prices are escalating at a rate higher than inflation, but the regulator's action in this matter prevents us from having any shortfall on investments. However, on the OpEx side, despite rises of the OpEx ceiling, we find ourselves exceeding it, prompting us to undertake and implement necessary actions.

For retail, operational performance remains overall stable. We've observed a decline in margins relative to the previous year, attributed to higher energy procurement from EÜA?, the government owned generation company, and the lack of fixed-price sales stemming from reduced liquidity in the power hedging market. On the other side however, there has been an uptick in volumes across both regulated and liberalized segment, showing Enerjisa being continuously the preferred choice amongst customers. Additionally, the warmer temperatures in the Toroslar region increased the demand.

Demand for solar PV installations among our industrial and commercial clients has risen, and thus -- that is also enhancing our gross profits. Similarly, E?arj, our 100% owned subsidiary investing in and operating its e-vehicles charging infrastructure, has expanded its network to all 81 provinces of Türkiye with more than 1,000 locations and realized a threefold increase in gross profits, fueled by the still nascent, however steadily growing adoption of electric vehicles in the country. The only difference between inflation adjusted and unadjusted figures of operational earnings is the inflation indexation of operational earnings to year-end from their respective months, creating a difference of TRY 6.2 billion as explained before.

Underlying net income without inflation adjustments has seen a rise of more than 30% compared to 2022, reaching TRY 5.8 billion. This increase is primarily driven by the increase in operational earnings, excluding CAPEX reimbursements, although partly offset by deposit valuation expenses in the retail business and higher interest expenses associated with our investments, whose returns are distributed over a longer period. The difference, of minus TRY 2.4 billion between inflation adjusted and unadjusted results of the underlying net income is the difference of the inflation indexation of assets and liabilities of our balance sheet also as explained before.

In 2023, our investments reached TRY 15.7 billion, a significant leap of 240% from the TRY 4.6 billion invested in the previous year. This substantial increase underscores our confidence in Türkiye and the regulatory frameworks, despite some short-term hurdles. The amount that we have realized at distribution business is 180% of the annual regulatory allowances and we remain committed to continuing our investments across all our businesses, as they are strategically important and profitable.

When it comes to cash, the TRY 14.5 billion comes from the -- mainly comes from mainly these profitable investments and the mismatch between energy costs and tariff prices which is both compensated for associated financing costs and expected to vanish throughout the year. Our leverage, this is financial net debt over operational earnings, stands now at approximately 1.4 compared to 0.7 at the end of 2022. This increase reflects our success in deploying profitable investments. The comparable low leverage for an infrastructure business allows for more investments that we are prepared to carry out if financial market conditions become more stable.

Lastly, we are proposing a dividend payment of TRY 2.79 per share to our AGM, amounting to 98% of our underlying net income with inflation accounting and approximately 60% of the underlying net income without inflation accounting, which was the basis of our communication up until the announcement regarding the application of inflation accounting. This is demonstrating our dedication to fulfilling our commitments to our investors.

For more details on the 2023 results, I now hand over to you, Cem.

[Cem Gökkaya, executive]

Thank you, Philipp. Page 5 provides operational earnings figures for 2022 and 2023, both on an inflation adjusted and unadjusted basis. As you can see, operational earnings, not adjusted for inflation, increased by 38% year-over-year to TRY 20.8 billion. Per segment breakdown of the TRY 5.7 billion increase in 2023 is TRY 4.3 billion from our distribution segment, TRY 0.5 billion generated from our retail business, and TRY 0.9 billion from customer solutions.

Per segment basis, our distribution business generated a segment growth of 34% year-over-year, with the 3 main components highlighted in the bridge, as follows: Financial income increased by TRY 5.8 billion on the back of higher financial asset base. CapEx reimbursement, which is a part of our operational earnings, but not included in the underlying net income, increased by TRY 2.1 billion due to higher rate inflation, reflecting also the result of our growth investment policies in past years, and additional investments in 2023. Efficiency and quality had a TRY 3.3 billion negative impact mainly due to a high OpEx underperformance of TRY 2.1 billion, driven by personnel expenses which increased mainly due to minimum wage.

Despite EMRA's additional 30% increase in OPEX ceiling for '23, operational expenses exceeded the ceiling. CapEx unit prices were similarly affected by inflation, however EMRA covered this loss for the whole sector retrospectively and we expect the same going forward. Last major item, amounting to almost TRY 1.5 billion that impacted efficiency and quality figure was the revision of the quality bonus by EMRA for the years between 2021 and 2023. We have raised our objections to these calculations, and EMRA is currently in the process of developing new regulations to more effectively measure the quality bonus.

These variances that I described indicates that managing financials in a high inflationary environment presents a distinct challenge. It's imperative for us to exercise caution, prioritize creating efficiencies, and find ways to fit in regulatory ceilings. Our retail segment also contributed to increased earnings, with a growth rate of 21% year-over-year, generated both from our regulated portfolio and liberalized portfolio. Sales volumes of both segments have increased 10% due to our ability to consistently satisfy our customers and attract new business, as well as the increasing demand driven by high temperatures during summer months, especially in Toroslar.

The regulated gross profit increased by TRY 675 million year-over-year as a result of higher retail service revenues and higher sales volumes. The liberalized segment contributed to the growth with an increase in gross profit by TRY 215 million in 2023, mainly due to higher sales volumes as well as efficient cost management. Moreover, our customer solutions segment generated an increase in operational earnings of TRY 895 million on the back of growth observed in the solar PV and e-mobility businesses, details of which will be provided in the operations slide.

Now, let me elaborate on the bottom-line development on Page 6. Our underlying net income, not adjusted for inflation, increased by more than 30% and reached TRY 5.8 billion in 2023. The TRY 3.6 billion positive impact from operational earnings, excluding CapEx reimbursements, was partly offset by financial results driven by the high inflation and interest rates. Our operational FX losses increased by TRY 606 million year-over-year, due to a revaluation effect of procurement contracts in our distribution business, which are denominated in FX prices.

Please note that here, active hedging mechanisms are offsetting almost all of this effect. Relevant FX hedges are reported under operational earnings. Net interest expenses of loans and bonds, including the impact of cash and derivatives, increased year-over-year by TRY 2.2 billion due to a higher average interest rate and higher average financial debt volume which is a result of our investment strategy.

Here, I particularly want to emphasize that the interest expenses we pay for the financing of the investments we make in our distribution business start affecting our financials immediately, however the returns are spread over time. Importantly, we have secured these financings at attractive rates compared to the market, demonstrating our commitment to efficient financial management and optimizing our cost of capital. The revaluation of the deposits we collect from our customers as collaterals have increased TRY 7.41 million due to accumulating high inflation. We also have a TRY 1.9 billion deferred tax effect of temporary differences arising from inflation accounting in accordance with tax procedure law.

Let's now have a look at our operations on Page 7, starting with distribution. CapEx came in at TRY 13.6 billion in 2023, up from the TRY 4.5 billion during last year. The main drivers for the TRY 11.1 billion increase are ramped up investments as well as higher inflation that increases the prices of the respective materials and services that get capitalized. One of the key factors behind tripling our investments is the anticipated advantage from the revaluation of our regulated asset base with higher inflation figures in the initial years. As a consequence, our regulated asset base increased beyond inflation by 73% year-over-year, reaching TRY 34.3 billion in 2023 compared to TRY 19.9 billion last year. Inflation impact on this growth is only TRY 7.6 billion. Efficiency and quality earnings differences were detailed in the operational earnings slide.

Now over to our retail and customer solutions segments. Both regulated and liberalized volumes increased by 10% year over year, indicating that Enerjisa remains the first choice of our customers. Another major driver is the higher consumption due to high temperatures, especially in the Toroslar region, more than offsetting any negative impact from the earthquake.

Regulated margins experienced a decrease from 8.1% to 7.3%, due to an increase in procurement from EÜA? which led to a reduction in the compensation for working capital associated with other resources, which are recorded under operations. Meanwhile, margins in the liberalized segment dropped from 4.2% to 3.8%, driven by the lack of profitable fixed price products, a consequence of the lack of a liquid power hedging market. However, it is important to highlight that the increase in sales volume across both segments has more than compensated for these margin decreases.

Our customer solutions gross profit increased significantly from TRY 160 million in 2022 to TRY 872 million in 2023. This equals to a growth rate of 445% year-over-year, driven by increased demand for solar power projects, where we install solar panels for our industrial and commercial our customers, providing them with access to green energy.

Here, as we only present the capacities of projects that have already received approval from TEDA?, you may notice that there is no parallel increase in the installed capacity numbers, which increased 5.4 megawatt p, with the gross profit figures. This discrepancy is due to the TFRS application, which recognizes some of the revenues of these contracted projects even in the later stages of implementation, before TEDA? approval.

In addition to the displayed installed capacity on this slide, we currently have 112 megawatt p of contracted projects. Revenues from 20.7 megawatt p of these projects are being partially recorded in our P&L only. Enerjisa's e-mobility business experienced a significant growth, too, with the number of our charging plugs more than doubling from 788 to 1,780. This expansion was driven by the rapid increase in the number of electric vehicles in Türkiye, alongside our investments linked to the public tender secured in the second half of 2022.

On Page 8, you can see the breakdown of our free cash flow development, investments and tariff impact on retail business. want to highlight that managing free cash flow is a crucial part of our business, and we have strong expertise in managing it. As you can see, free cash flow decreased from TRY 1.5 billion to minus TRY 12.9 billion TL. This decline was an expected outcome as it had been signaled in our last 2 earnings calls. The 2 main reasons for this decrease are the lack of tariff changes to reflect energy costs and the significant amount of investments we have made.

The mismatch between the energy costs and tariff prices have been the reality in the last two years. TRY 3.8 billion surplus we had at the end of 2022 turned to a TRY 3.1 billion deficit at the end of 2023, creating a negative cash impact of almost TRY 7 billion in 2023. The negative cash impact at the end of 2023 is expected to be compensated in 2024.

Furthermore, our investments in 2023 realized TRY 11.1 billion above 2022, closing the year at the level of TRY 15.7 billion. Enerjisa directed all these investments, which increased more than threefold compared to 2022, towards profitable investments that meet our ambitious internal hurdle rates in distribution infrastructure, customer solutions, and e-mobility. Free cash flow is not a short-term KPI for us as this is the nature of this business to raise financing and deploy the capital to profitable investments. In addition, in the usual course of the business, there may be short term fluctuations in free cash flow due to regulatory changes, but in the long term they are sufficiently compensated over time including the respective financing costs. It is worthwhile to note that we maintain a much lower leverage compared to other utilities in more stable markets.

Turning to page 9, I want to walk you through the major changes in our net debt position. Our economic net debt increased by 137%, going from TRY 15.2 billion in December 2022 to TRY 36.0 billion in 2023. I would like to highlight once again that most of the increase in borrowings is a result of our CapEx overspending on profitable investments and the temporary regulatory impacts as the mismatch between tariff and energy costs. Even after the high amount of investments we made in 2023 our leverage ratio increased from 0.7x last year to 1.4x this year, still allowing us to continue profitable investments if we consider the combined regulated and market conditions as sufficiently advantageous.

Looking at the financing developments in 2023 on page 10, Enerjisa delivered its targets in 2023, in the very challenging financial market environment in Türkiye. During a period of limited liquidity, having successfully diversified our resources in advance to the regulations that restricted bank funding helped us reaching the required funding effectively.

Our bond issuances, for which we laid the groundwork in the last quarter of 2022, became a highly effective source for us. In 2023, we issued TRY 17 billion worth of bonds which made us the biggest issuer in the real sector. Besides issuing bonds and limited borrowings from local banks, we continued borrowing from multinational institutions like the EBRD, with which we enjoy a strong and collaborative partnership. Expanding our funding sources and reaching attractive interest rates allowed us to sustain our investments well beyond the regulatory allowances, ensuring profitability even in an environment where capital is scarce and costly.

In 2024, we continue to utilize these sources to effectively finance our investments and operations. In January, we signed a contract with the EBRD for a 5-year USD 100 million equivalent Turkish lira loan to finance our investments in the earthquake region. Additionally, in January and February, we issued a total of TRY 5.5 billion worth of 2-year bonds in two separate offerings. We structured all these borrowings with variable interest rates in line with our expectations of interest rate developments.

For the remaining period of the year, we are continuing processes with multinational institutions for additional long-term loans, while also engaging with Turkish banks and bond investors for our financing needs.

I'll now turn it back over to Philipp for his concluding remarks.

[Philipp Ulbrich, executive]

Thank you, Cem. Enerjisa Enerji achieved all its targets despite a very challenging environment in Türkiye. As we presented you, we especially met all of our financial KPIs that were calculated and provided as a guidance without inflation accounting as we had set at them at Q1 2023. A highlight is certainly the increase in our investments despite the high interest environment. We expect this to drive the company's profitability according to our long-term outlook provided, especially when we manage our cost basis according to the ceilings provided by the regulator. I can tell you that the whole management team is committed to this.

As we conclude our presentation, I want to underscore Enerjisa's dedication to upholding its position as clear and profitable market leader in the interest of all of its stakeholders and especially an attractive investment for its shareholders. Thank you for your continued trust.

And with this, let me pass back to Çigdem to open up for questions.

[Çigdem Asil, executive]

Thank you, Philipp. [Operator Instructions] Our first question is coming from Muharrem Gülsever.

[Muharrem Gülsever, analyst]

My question will be regarding the earthquake region and the total damage on the infrastructure side. According to the reports, there was a hot $600 million damage. And what will be Enerjisa's responsibility on that, I mean, rebuilding the infrastructure, the power infrastructure in the earthquake region? And if you are going to make the entire investment, is it going to be included in the existent reimbursement mechanism? Or should you make a different agreement with the government? Or how should we see the development on that part particular region and the consequent financial impact on the company?

[Cem Gökkaya, executive]

Thank you very much for the question. First of all, our assets were insured and we got the insurance compensation from our insurers. Second, our regulated asset base has not been amortized for this. So, whatever we have spent until now will remain in our -- I mean, almost all of that will remain in our regulated asset base and the new investments will, again, pile up in our regulated asset base.

And until now we have spent close to TRY 1.5 billion to TRY 2 billion, I think close to TRY 2 billion, not only in -- for investments, but also operations, for our employees there. And in the next years -- in the next 3 years, we are expecting the need for investments in that region to be around TRY 8 billion, as I mentioned, which will again go to our regulated asset base and will be reimbursed via the tariff. Does that answer your...

[Muharrem Gülsever, analyst]

Yes. It does, indeed. And my second question will be the collection in the region. How will your group manage the collections given the postponement right of the consumers?

[Cem Gökkaya, executive]

Our collections have not been affected significantly and the effect is being paid to us via the tariff. So there is no big effect, but the effect is also being paid to us. And until now my friends are telling me that we had a TRY 300 million effect that, as I said, paid to us via the tariff.

[Çigdem Asil, executive]

We have a written question from Cenk Orcan from -- please -- "Thank you for the fair amount of disclosure on inflation accounting effects. What will be the basis for dividends going forward? What happens with the 60%, 70% pay-out policy?" is the question by Cenk.

[Cem Gökkaya, executive]

Thanks for the question. I think we will be explaining and disclosing information about this in our Q1 earnings call as Philipp also mentioned, together with our guidance going forward. So for the time being, I will not answer this question, because we will need really look at inflation accounting and how we translate that to our guidance going forward.

[Çigdem Asil, executive]

We have another question from Umut Öztürk. He is thanking us for the presentation. And the question is, "When do you think, you will start to generate positive free cash flow?

[Philipp Ulbrich, executive]

This is Philipp, thank you for the question, a quite interesting one. As I think there can always be the understanding or the misunderstanding that free cash flows for a company like ours, so infrastructure-heavy electricity distribution is something negative, if they are not, not positive. I would see this differently and I think there are also lots of examples. And if you look to companies operating, especially across Europe, where we see a lot of companies now disclosing negative free cash flows due to investments, so the answer lies very much in what is the investing environment.

As also mentioned, if we see stable financial markets offering us the possibility to even increase our gearing, which is really low so far, then we will continue to invest. If we see really high profitability in what we are doing on the CapEx side, and then free cash flows might remain negative. If certainly, the investment environment is not so positive, then we might reduce our investments and that will turn free cash flow very easily to positive.

[Çigdem Asil, executive]

The next question is from Alihan Gürleyen. His question is, "Will you be publishing detailed non-IAS 29 financials for 2023?

[Cem Gökkaya, executive]

Thanks again for the question. That won't be possible, unfortunately. Actually, this presentation was prepared, of course, before Friday last week and in the version before Friday, we had these financials in the appendix. But the announcement by CMB -- I mean, the communique, they published, it's not allowing us to do that. They only allow us to present the main KPIs, main metrics without inflation accounting.

[Çigdem Asil, executive]

We have now questions from Emre Sezan. His questions are, "The OPEX in excess of the ceiling, do you expect a revision in the ceiling?" And his other question is, "Do you expect to collect it in the future?"

[Philipp Ulbrich, executive]

So again, Philipp, thank you for the question, Emre. Yes, we expect a revision in the ceiling. And the mechanism is very clearly that the regulator, and this is also coming with its responsibility to the public, has to first understand what is the cost basis of the distribution companies in Türkiye. I think they are all suffering like us from high inflation. The increase of cost of living which is certainly then also creating a demand amongst the employees.

And this is certainly not, to an extent, as it was foreseen. So there is analysis done by the regulator and we clearly expect an ex-post revision of the ceiling. And with this we certainly expect that it is collected, because then it's transferred to the tariff. This is then more in the question about how it is going cash wise. As long as we are also getting sufficient interest on it, this is fine for us, as certainly the credibility of the government that stands behind it is fully sufficient.

[Çigdem Asil, executive]

So our next question is from Cenk Orcan. The question is, "Is it possible to give us a sense of how much tariff increases are required to offset the negative free cash flow that stemmed from the shortfall between procurement costs and tariffs?"

[Cem Gökkaya, executive]

Sorry for not being able to answer this, Cenk, [ today ] because this a decision of the regulator as you know and we do not want to speculate on that, comment on that. Okay, it seems that we have no further questions for now. Thank you very much for attending today's earnings call. If you have any further questions, please do not hesitate to reach us through [e-mail].