AB KN Energies (KNE1L) Earnings Call Transcript

Good day and welcome to the KN Energies Investor Conference for the 8 months of 2025 Financial Results. I'm Simona from Nasdaq Vilnius, and I'll have the pleasure of moderating today's session. Thank you for taking time to join us today. And we are sorry for some delay at the beginning, but over the next hour, maximum hour, we will provide you with a comprehensive insight into KN Energies' financial performance and unaudited results for the first half of this year. Before we begin a few quick notes, this session is being recorded and will be made available on the Nasdaq Baltic YouTube channel shortly after we conclude. We encourage you to submit your questions using the Q&A function located at the bottom of your screen throughout the presentation. We'll address this during our dedicated Q&A session following the presentation. I'm delighted to introduce today's presenter, Tomas Tumenas, Chief Financial Officer, who will walk you through the company's performance and answer your questions. Without further delay, I'll turn the floor over to you, Tomas. Please proceed.

Thank you, Simona. Hello to everyone. Good morning. As Simona said, I also apologize for some technical disturbance issues. Unfortunately, I have not been able to make it the full presentation in the full presentation mode, but tried it as much as I could, something maybe with my skillset or computer. But nevertheless, I hope you see their information. And of course, I will give my presentation about the first half results of KN Energies and definitely, you are very welcome to ask the questions. We'll be very happy to answer those. So let's start. As you know or may be following our company, so we have once per half year our presentations and we already finished 6 months results. And I would like to make some big points what happens during this half of the year. Also, I would like to give some insights for the future for the second half of the year of the development. So overall, as you see, I would resume that our results for the 6 months are really good, really in terms of the profitability and the revenue growth, especially the growth in the revenue was the key contributor on overall financial performance if we compare to the last year. And internally, within the company, we're comparing our results, our achievements with the budget because the budget for us is very important. Of course, the budget is important in all companies, but let's say, in energy companies, especially it's very, very crucial one. And here, we are not giving by the logical things, the budget figures, but we also would like to see a point out that we have of the budget that we have. But since we're comparing to the last year, so we see that our revenues is very quite impressive growth, 20% in regulated business, which still accounts to 60% of the revenues is a very big achievement. The EBITDA growth is around 25% versus the last year. And accordingly, all other KPIs, net profit and adjusted net profit also is growing. Adjusted net profit, I would like to comment and remind that usually previously, let's say, the close of the last year, we had a big effect of ForEx fluctuation because of our liabilities and assets towards the lease liabilities of the FSRU and the loan supposed to have. So the fluctuations in the currency exchange, dollar versus euro, was quite substantial. Therefore, the company has been presented adjusted net profit figure or KPI or metric right now since we acquired the vessel at the end of the last year, in December. So we don't have that fluctuation anymore. But still for the comparison, logic, we are keeping that KPI and after the closing of this financial year, we will remove it because it doesn't make sense to have it anymore. If we take -- I just also wanted to point out in this slide that you see that the strong ROCE figure. Just to understand for you, the industry average is -- here we are presenting half year ROCE figure. If we take annualized one, it will be high around 5%, and the industry average is around 3%. It's in the ROCE. And the share price movement, if you take market figures, as you see, the company's shares growth during the first 6 months of this year by almost 18.5%, and we outperformed the overall growth of the Baltic Stock Exchange indexes and reach the capitalization almost EUR 110 million. And also, we are very happy about that, especially taking into account again that knowing our structure, our shareholder structure where 72% is controlled by the state and the 10% by Akmenes, meaning 82% of the shares, I would say, yes, are totally liquid. So we have very small free float. And again, still, our activities really heavily depending on the regulated business, which accounts to almost 60% of the revenues and around 55% of the EBITDA and profitability. So the share price growth is really, I would say, quite good. I would not say may be impressive but really good achievement. And really, we are happy regarding this and hope that share price will grow further on, maybe not that high base, but it will experience growth in the second half of the year. Going further, I would like to highlight key achievements, what happened, key milestones. So one thing is, was that the company managed -- successfully managed to sign a long-term agreement or prolong existing one with our major client, ORLEN Group, which accounts to almost 65% of all revenues and liquid energy business segment. We prolonged that for the next 3 years with better financial results, which we had previously. So it was really lengthy and important discussions with the company or LAN meeting with our partners and it's very, very important for the securing long-term stability in cash flows and revenues that generates a liquid energy business segment, which up to now is the [ second ] in terms of the revenues; and second, in terms of the contribution of the EBITDA, so this is what's really important. And that, on one hand, gives, I would say, stability and assurance in company's future business. From the second hand, it also allows us to make appropriate investments in the line with our, let's say, goals or plans of our main client, ORLEN, which, in turn, has its own investment, big plans and projects and all big renovations they're doing within their facilities by switching heavily more on various additional or new or biofuels. Accordingly, we are also reinvesting and renovating our facilities just to comply with the requirements of the main clients. So this is very important as well from our CapEx perspective from our investment perspective into liquid energy terminal. Secondly, we are very happy that, yes, it's not contributing like additional profit or something, but we are very happy that historically, we already reached 500 ship-to-ship LNG operation benchmark since KN Energies launched FSRU activities in 2014. So it's a very big milestone, and we are very happy about that. On top, quite important achievement was that we are implementing -- starting to implement and secure it, let's say, the project of gasification of LNG terminal -- I'm sorry, not gasification, electrification of electricity supply into FSRU. And this is important in that sense that the company has the ability to switch as much as the good green energy solutions, and that electrification project will allow us to increase consumption of electricity, green electricity, which is consumed by FSRU versus the gas. So that is very important also from sustainability point of view to have as much less CO2 emissions as we can. So this is -- that project has been finalized, confirmed by the team and by the management board, and we are in the process of implementing that project at the moment. Going further, also very important things has been achieved in the area of new energy, new energy business segments under the global energy business segment, but we hope that in the next couple of years, that new energy business segment will be -- will report as a separate one business segment when it will increase its financial ability and revenues. So in that business segment, new energy business segment, we are very focused on implementing various investment projects that is at early, let's say, development stage, and should be launched in terms of successful implementation after the next 3, 4 years, but that now we're very concentrated on as we call in the CCS project. Here in the CCS project, we have an agreement, and it was announced by a stock exchange with the main business partners where KN is a leading role in our partnership company, Siemens producing companies in Akmenes and in Latvia, Broceni, as well as logistic companies, which are involved in carrying carbon capture by vessels. So we have a strong consortium. And as I said, KN is leading role in development in that investment project. And we got subsidy for our first, let's say, stage of investigation and feasibility studies, that give us a more solid background, I would say, in terms of both of financing those investments and in terms of the solidity of proving the financial availability of the CCS project. Secondly, we got -- we had a visit with the Ministry of Energy a couple of months ago in Vietnam, and we signed an agreement, extended, actually the agreement with one of the biggest South Korean energy in a broader sense company, which is one of the biggest player in Vietnam market as key innovation. And we had previously good connections with them. So they are, for us, a very important partner in looking for exploring the investment and business opportunities in terms of offshore LNG business in Vietnam market. Vietnam market is a growing market. It's one of the growing markets in the world, actually one of the biggest growing market in the world in terms of offshore LNG, let's say, business. And KN Energies is trying to put this step into those markets. It's, of course, not easy to do and not very quickly entrants. And having the partner side is very important for us to share experience, to share information in what is happening in the Europe, what is happening in Vietnam and South Korean consortium also is looking and screening the European market. And we're also planning to assist them in their investment plans in here in our home market in Europe and like to have very good friendly and business-oriented relationship. And as I said, with all an example, we are investing into the biofuels into methanol into the new products that we are planning to serve within the next 1 year, as ORLEN is introducing those products in their product portfolio. And the growth of, let's say, green products or biofuels, various types of biofuels, including as well biofuels for the big vessels, biofuels for the airplane industry, the demand for those products are growing. And ORLEN is orienting the business towards that direction as well. And we, as KN, also investing in those facilities. So these were the big milestones that the company during the first half of the year achieved. Then secondly, I would like to give some market overview what is happening in the LNG business, and in liquid energy business. So let's start from the key maybe metrics that we are really watching a lot within the company. So of course, for us, was used to be very important fluctuation of the currency exchange since we successfully executed transactions last that we don't have big impact at the moment, but still, we exposed maybe not to dollar, but the Brazilian real, having our total company over there and also executing hedges regarding the Brazil versus dollar exchange rate. Gas. If we take the gas prices, the gas prices has been fluctuated since the first half of the year. And I would say that at the beginning of the year, those were quite high on the quite high level, and the gas prices has a direct effect in our performance because we use our gas for internal consumption for FSRU for LNG and terminal. So total gas accounts for almost 2% of total cost of goods sold within the company, but still anyway, it's important and also the gas prices obviously has a total direct impact on the consumption on the consumers' behavior, the consumers and industry decisions, how much they would like to be keen on consuming the gas in the business operations and definitely the price has a very direct effect, so it was fluctuating. As you see, the price was quite high at the beginning of the year and steadily it went down. And right now, they're trading TTF around EUR 33, and I would say that this is like a normal, in my opinion, normal gas price, meaning that at the moment, despite the various changes or effects that happening in the world market, in energy world market, in oil, in gas -- in gas supply and gas consumption, the level is, I would say, on the normal, let's put on the normal level, meaning that the industries could accommodate those prices. And of course, for the industry, for the consumers, it's very important that the prices would be more stable rather more fluctuating. What it will be in the next half of the year, nobody could say, but taking into account, the overall situation, the supply situation, the storage facilities and storage amount of the gas, especially in Europe, I would expect that nothing would happen dramatically. Artificial measures would be launched. The price could slightly increase from the current level, but maybe not to reach EUR 60 or EUR 58 of TTF for the second half of the year. And another very important macro indicator metric is carbon dioxide emission allowances because those -- for us it's heavily, let's say, quite heavily impact the variable costs as we have around per year, approximately, we need to purchase 75,000 certificates. And those costs accounts for 9% roughly of total cost of goods sold in our case in our cost structure around 9% or carbon capture certificate prices and also those prices fluctuate. And there is no, let's say, strong link to one another benchmark, how to track it and how to predict, but basically, I would say there is some relationship with the gas prices maybe with some big lag, but still exist. And as we see, the fluctuation, EUR 5 fluctuation is quite big if you're taking the quantities, how much you need. And what KN in that respect is doing KN has agreement with financial partner, regarding the hedging. And we had a quite big and strong, I would say, a good contract regarding the hedging facility. KN has free, let's say, reserve free hedging buffer from the bank. And this is one thing. We are not allocating KN in many for our new margin calls. This is very important, taking into account, of course, our strong balance sheet, meaning so we don't have a margin cost, not in allocating capital for those. And also in terms of the timing, we agreed to have, I do not know if there is any other companies, but we have term contracts with our hedging in -- sorry, in carbon capture hedging contracts, lasting to 36 months. So actually, it's very long. It's almost 3 years contracts. So we can go into the cash for that long period and it's really important and a very big achievement for managing our carbon emission prices because we are watching the market situation, watching the historical trends and watching, I know that, let's say, the price that regulator gives to us. So meaning for us, it's a very big benchmark how much the price we have given by the regulator. And our aim is to try to get as less price in the market versus that we got from regulator prices because those impacts directly the company's results and of course, the end of consumers. Also, I would like to remind that, how to say, the price is that we're getting from regulator or the, let's say, the gas prices, which is for LNG activity or emission prices for, again, LNG activities, they are covered by regulators. So let's see, from that perspective, maybe you can say for the company, if I may use the word, could not care about that. But this is not true because it's -- we care about our, of course, our level of the cost and about the prices that we are passing to the consumers. So for us to get as much cheaper prices in the market at the right time, it's very important for both reasons, the company performance and performance for the end of consumers as those costs are compensated by regulator. If we take LNG market review, some also hints about that what's happening. So if we take our LNG activity, and as you see in our presentation, the total utilization rate of our vessel this year -- in the first half of this year is around 65%. The average, as you see in EU, was 52%. And it's really, I would say, very strong indicator, very strong financial indicator. If we take Lithuania, Lithuania imports LNG via FSRU and actually all Baltics imports by our FSRU LNG. So as you see, 70% is imported of LNG from United States for obvious reasons. and 24% from Norwegian and 7% Trinidad & Tobago. So as currently, 1 year and 2 and 3 years ago since the war started in Ukraine, we totally -- we're keeping our mandate and our view that we are absolutely prohibiting import from Russia and LNG, which unfortunately, Europe still has import of LNG from Russia. If we take -- sorry, if we go further and the gas market overall world gas market overview already touched upon regarding price fluctuations and our view on this and actions on this. On top, what I have mentioned, of course, regarding the gas prices, we're also going into the hedges for the gas prices and again watching the market and using hedge facilities with our financial partners. In that respect for the gas prices and for the EU carbon emission, at the moment, the company has already executed all the hedges, and we already covered for this year fully. Some remarks or points regarding, again, the LNG market itself. So at the moment, at the end of the 6 months, the total gas storage facility utilization was around 60%. Currently up to now is more than around 73%, which is less than we used to have a year ago. And actually taking into the account the prices of the gas prices and situation in the overall gas -- world gas supply, there is no threat, let's say, regarding fulfillment of our countries obligations to have at the beginning of November, the gas storage facility should be filled up to 83%. So it's like obligatory things within EU. And at the moment, there is no any signs that those achievements has not been, let's say, implemented. So currently, we have less utilization rather versus last year, but overall macro situation doesn't show any signs that is like a pressure of tension in that respect. So going to our business segments, finishing the overall market presentation just to understand where we operate, so taking the biggest -- our business segment in terms of revenues and profitability, regulated business, LNG business. So the growth of revenue was the highest in [ Technical Difficulty ] last year first half. So growth in the revenues was the highest around 37%. And we are happy about that because utilization, as I showed you, is quite high of the FSRU of our vessel, and we're already, as is mentioned, managed to perform 42 ship-to-ship operations versus 30% of the last year. And also, our regasification volumes increased, and also the tonnage that we received and regas during the first half also increased. This is good achievements. Another thing that we are -- I'm not mentioning in our presentation that, as you know, we have let's say, in LNG business segment, the total capacity are booked until 2032. And taking -- looking at the current situation, daily situation of the market, our consumers, not -- our clients, let's say, our clients, they have their own plans on vessel delivery, depending on the market situation on the prices. And sometimes they are revoking some, let's say, cargoes. And what it means? It means that when you're revoking the cargo, we are not simply having that cargo not reloading and not making any regas while we're getting the paid for meaning take-or-pay contracts. So it's like, I know revoking is not a problem from a financial point of view, but of course, from a utilization point of view, et cetera, it's not very welcome action. But anyway, it doesn't have any financial negative impact. So during the first half of the year has been revoked 5 cargoes. And the commercial team managed to place additional 3 ones, new ones, meaning that the commercial team went into the market and, let's say, sold the new 3 cargoes. And here, we have a positive financial back because we got from one hand, take-or-pay contracts from another hand, we got extra revenues for this new 3 vessels and new 3 cargoes. And also being transparent from that revenues, which goes into regulated activity, we have an agreement with national regulator that 30% of those revenues will be applicable for the company, meaning that 30% from those additional cargoes is directly in our pocket and the 70%, the rest of the revenues, is passed on to the end of consumers. So while 1 year ago, we don't have that agreement. So meaning this is really as well an important step for the company and for motivating the people and trying to look for as much as possible commercial activities on top of the regulated because it's not easy to have regulated assets to regulate things to have extra something on top since we already has been booked to 2032. So this is a very, very important thing that we managed to achieve the regulator and that we are managing to get extra cargoes for our LNG regulated activities. On LET, as we're calling on liquid energy market on our second business segment, I would say here, the overall situation in summarizing very briefly is stable. We don't have any big growth or any decline. We are stable in that respect. As I said already, we had an agreement, a good agreement with ORLEN, also with the smaller clients with stable in those operations. And if we take a look on the -- how look like the liquid energy -- from a market point of view. So as you see, we have also stable flow of the tonnage of various, let's say, oil products at Klaipeda versus the last year. And we see the growth in Ventspils. So Ventspils recovered comparing year-to-year operations, while the rest, let's say, Tallinn and Riga and Liepaja, they're smaller ports. They are, as you see in the slide, they're almost also the same, that they used to have last year goal. So overall situation if we take as you see Lithuania is almost doing the same that it used to be half a year ago and largely improved. Estonia also is keeping the same path that they had last year. But again, we're showing the year 2022. So just before the war. So you see how is that still big room, let's say, to come back to the level that we have clear war. Can we succeed? I'm talking not about KN or just overall market for the liquid energy products in all Baltic states. It's like a hypothetical question because definitely when you are losing big flows from Belarus and Russia. It's definitely to have, be compensated. It's not easy task, taking into account our geographical situation. But this is the picture and the situation, meaning that we are not declining in terms of the growth or slightly improving. And what it will be in the next years, difficult to guess. But our belief is that moderate growth should prevail in the market for liquid energy products. If we take our share, KN share is approximately 39 -- fluctuates from 35% to 39% of all liquid energy North Baltic ports, which we refer to the, let's say, we are the biggest, of course, terminal in that respect and having the market share fluctuating around 35%, 40%, I think it's very, let's say, this is the market share that KN should keep on and of course, try to increase it, but it's a very impressive market share. Already I mention the business of our liquid energy -- of our liquid energy business segment. So revenues are stable. We are carrying on investments into upgrading our facilities and infrastructure and also focusing on biofuels, basically on biofuel. Also, we are in the discussion with the Ministry of Defense. As you know, we have an obligation and restoring the critical oil reserves within Subacius terminal. So right now, we have discussions with Ministry of Defense regarding increasing the quantities regarding the possibility to, let's say, store extra quantities for the defense needs of German army, which will be deployed within next 3 years here. So we're in a process and the discussions and when something will be settled down, we will come into the market and make those announcements because we know thinking, preparing how to support. In reality, this is very critical place or critical area of appropriate reserves, oil reserves, diesel reserves for national security. Very important business segment, the most, let's say, looking forward, important for us, in the vital business segment is commercial LNG and global LNG. So what happened during this first 6 months of this business segment. The revenues are almost the same that we had last year ago. It is slight below just by 3%. And it was the reason very, let's say, subjective when you're making, let's say, that if we're comparing the results first half of this year and the next year. We have, in the last year, when we got contracts in Germany, usually some part of the contracts have like a bond scheme. So we got that, let's say, bonus in the last year, which is right now is already in the operational mode. So that bonds excluded we are even in terms of the revenues. And in Germany, as you know, we are operating commercially 4 out of 5 German LNGT terminals. And in one terminal, we have technical operations. And I would say that in the first half of the year, so operational activities have commenced, has started with no any accidents with no any problem. So we are already in operational mode, and this is very important. So already, we have actually full staff needed to take care of our responsibilities and obligations towards that Deutsche Energy Terminal state-owned company, so we've already settled here. We have the team in place. We have everything is going on. So we are in operational mode, and first carriers already have been executed in Germany. And this is -- they are very happy, meaning that Germany is very happy that the state of the Germany that already in those operations investments has started to pay back and first carriers, cargoes have been shipped via those terminals, and we are part of that. So it's really, really important achievement and the meaning that we are in the right track and hopefully to proceed further without any technical or any other, let's say, negative impacts of operating those terminals. Very important for us as well is that in Brazil -- in Brazil, we have our terminal, as you know, and it depends activities a lot, it depends on electricity plants run by GNA. And usually, we are mainly running on the -- let's say, serving the one electricity plant. And in the first half of the year, they launched the second one, and also it's very important because it has many also complexity in that business as total investment into GNA with those electricity plants is more than EUR 3 billion. So actually, we launched the second one electricity plant meaning using more gas and for us is very important in terms of, again, getting -- fulfilling our obligations, getting things done and getting maybe not very big, but still steady incomes, securing for the development and profitability of Brazil operations. So it's very important. And then regarding the achievements or cooperation agreements with probable expansions in Vietnam market, I already mentioned, so I will just skip it and not spending more time. New energies already has been discussed by me, meaning especially we are active in CCS project. And as I said, we're really happy having consortium in place, very strong consortium, a very, I would say, understanding the business, especially from manufacturing side, from cement producing side. As those industry cement production industry, fertilizers production industry, chemistry industry in Europe will -- are facing and will be facing big challenges in terms of carbon emission as the heavy consumers and according to plan, of course, to this current one, maybe after a couple of years, could be something different. But it doesn't mean that the toward trend will be, let's say, opposite, meaning that carbon emission or diminishing of the carbon emission would be the goal, ultimate goal of Europe, and maybe the quantities, the size could be readjusted, let's say, or reconsidered. This is my personal opinion, of course. But the total trend is in here. What it means? It means that all producers needs to find the solutions, technological solutions for storing capturing the carbon emissions and cement is one of the industries and biggest players of European cement industry, SCHWENK Group, which operates 2 plants here in Latvia and Lithuania within our team. And they are also very, very, very professionally considering and analyzing all those possibilities because for them, it's very important, just even, I would say, the vital importance is very big, what it will be the outcome of the industry itself within the next, let's say, 5 years. So we are a very heavy hands on in that project. And right now, we are in the stage of investigating economical benefits, all this value chain, all the logistics chain. It's not easy definitely project. And because it's a new for full Europe, I would say, the first project has been launched in Norway, with the carbon capture in the sea. And, I don't recall the real figures, but they are big ones. They are not EUR 100 million. They are much more and the has been those -- that project has been funded basically by the Norwegian state. And of course, this type of investments are very dependent on the subsidies definitely because this is a huge amount should be invested. And we already secured one subsidy program for the feasibility study. Right now, we are finishing it and going into the [ next ] stage, where also we are aimed to secure our partly the compensation for the feasibility studies. So I would say, in CCS project, which comprises the biggest part of our new energy business segment, which currently from a financial point of view, has a loss, no income, obviously, in the development stage, but we are on the right track. We are really on the right track and don't want to give anything just -- but I truly believe in success of that project. And watch our, let's say, movie, and we will announce in the next couple years and months of development of that business segment. Sustainability is very important for us because we are emitters, and because we care about the nature as well. So the biggest thing we already mentioned with electrification project, if I now offer you and our investments into biofuels and methanol programs for more friendly, eco-friendly oil product. And we're coming to the summarizing our financial results and some metrics on our balance sheet. So as you see, the major KPIs, the major financial metrics are growing. Looking forward, for the second half of the year. I would say that growth would not be -- should be not very impressive like this one, obviously for obvious regions because of the, again, coming into the autumn and winter period, where definitely some inputs, variable inputs are higher versus, let's say, spring and summer, and also the growing pressure on HR costs as those accounts for 24% of all costs in our structure. Just again, to remind you, if we take our costs level in the first half, the amount of the cost -- total cost is around EUR 87 million of KN Group. And the biggest part is depreciation, it's right -- 34%. And depreciation, of course, has a direct reflect on the net profit or EBIT, but it's not cash item and our depreciation increased if we take first -- first 6 months of the -- first half of this year versus last year because we acquired the vessel into our assets. And because of our investments that were going on, so 34% is depreciation, 24% are HR costs and 9% of carbon emission prices. So this is basically our biggest cost items. So in the second half, we would expect to have less growth in those key KPIs, but meaning that the annual targets, and budget targets, which I can't reveal, we are hoping to be able to overcome. And profitability ratios, I would not touch. They are just, who are interested you can see the figures and everything, only we are trying to compare ourselves with the industry average. And from the companies that we can obtain the financial indicators, financial figures. And just summarizing, we are slightly above in all KPIs versus our competitors, not direct competitors, but peers, let's put in this way. And some information on the balance sheet. So if we take leverage I would say nothing has changed here since the half of the year, only maybe if you look at the SRS figure, it went down, but it's very obvious because when we acquired the vessel at the end of the last year, that repayment program for that acquisition has started in this year, and it gives us up to EUR 6 million additional repayments. Total repayments of the loan per year within KN Group is around EUR 19 million. So the SRS should be looking forward at the same level, no less than 2x. And net EBITDA we have, as you see here, 7x, but this is, of course, all our loans are secured by that by the guarantee of the Lithuania. We're the only one company which actually has that guarantee. And from that perspective, absolutely they are secured. Taking free cash flow, which is very important at least for me, for a CFO point of view and positive really in free cash flows. And as you know, we paid for the last year, EUR 8 million of dividends. And the payout ratio was quite high, 60%. So it's like two things. One thing is good that we are managing to pay, so healthy dividends and dividend yield is around 8%. That's really a big one, in my opinion, compared even to the whole Baltic states, but from another hand, we have a very, let's say, ambitious growth plan, investment plan. So obviously, high payout. No, it's not the way that should be like when you're being 60% to 70% in form of dividends. But nevertheless, it's manageable things, but mainly, my message is that free cash flow is very positive for the company, taking out of all repayments of the bank and only CapEx, let's say, eats our free cash flow. What we are doing at the moment? So we have just some clue, we have an investment project according to our strategy quite extensive, amounting to more than EUR 400 million. But if we take the first 3 years or, let's say, the year to 2030, which is more obvious, it's around EUR 100 million. And some of those investments are ended for the profit like biofuels and expansion in the global markets and of course, the big part as well for maintaining and for renovating the facilities, which directly not contributes the profit, especially we should overgo the investment in our jetties and upgrade our jetties as those have not been renewed or upgraded since 1965. So we'll have those investments, and this is maintenance type of investments amounting to roughly EUR 40 million. So as I said, until 2030, we are planning to have EUR 100 million investments. And right now, we are in discussions with the commercial banks. And we are aiming to have an agreement to fund our investments in this fall. And while closing this financial year, maybe we'll have already in our balance sheet some commercial loans. I think this is very normal that logical to have commercial banks helping us in making our investments, freeing our internal funds because owners money is definitely more expensive than banks, and we have very positive feedback from banks. They are keen on finance our group. And our aim is to secure our long-term investment projects with the banking financing without any collateral. And with as high as mature repayment schedules. Taking -- just reminding you, the biggest, as you know, the only loans so far for FSRU and for the facilities, EUR 340 million. And our deadline for repayment is 2044. So for us, it's not -- let's say, we are not worrying about the amount of, in terms of the numerical figures, the loans. For us, it's important to have as much lengthy repayment schedules with the banks in order to have strong and healthy cash flows because we are a midstream company, energy midstream company heavily exposed to the assets. And therefore, our return on assets or ROCE are not 10% or 15%. It's is not this type of the industry. So our aim is to have better than industry level, ROCE maintain up to 5%, 6% in the long run and also around 2%. So this is it. This is -- the rest, it's more soft things. So thank you for listening to me, and I'm happy to answer the questions.

Thank you for your insightful presentation, Tomas. Now we indeed will move to a Q&A session. [Operator Instructions] And the first question we received in advance, and it is following. Do you plan to update the strategy or if the investments are still in line with old strategy?

Thank you for the question. Briefly answering. Once a year, we're renewing the strategy. This is our like internal, how to say, a modus of operandi, and we're reviewing once per year and obviously adjusting to the changes of what's happening during the year in the market. So this is one thing. Another thing what has been, let's say, different according to the latest version of the strategy versus original one, actually no big differences. Only one thing we have, like in original strategy, we have been planning 3 years ago, actually already 2.5 years ago, that we will have a investments into -- LET business segment in inland hub meaning that maybe we would have inland hub terminal, which could reload various oil products and transport via mainly railways. And after investigation of the business environment and situation, we skipped that project. So the value was around EUR 11 million of probable investments at that time. So at the moment, we excluded that from our, let's say, long-term strategy because of no financial feasibility of this project. And the rest are in line with the original strategy.

So the next question came during the webinar. And is it the following, how is the CO2 capture project progressing?

Already, I tried to answer and explained, we are in the first stage, let's say, we have -- we can grab into a couple of stages, first, second or third. So the firs stage is really the way feasibility studies are taking place. And the second stage, if feasibility study shows that everything is okay, let's say, from an economical point of view and all parties says, okay, let's go explore further on. Then is the second stage, more extensive and more extensive, let's say, construction things to be elevated, et cetera, stuff. And then in that second stage, you are also arriving to the, let's say, to the agreeing on the cost structure on the pricing, et cetera, so that we are right now in this first stage. And it's according to the plan. As we already mentioned, we've got also the subsidies for this. So we are smoothly going into the second stage. And of course, the second stage will be very crucial one. It already started and would be finalized in the next year, which will show more, let's say, should answer all, let's say, financial feasibility questions regarding the success project. And also, in that stage, we need -- our goal is also to secure -- or not to secure, to get -- to receive the subsidies for that, let's say, project. And this is the part of the task, being -- having already the common interest status of that project as it says, because we are representing -- we represent 2 countries, Latvia and Lithuania in terms of the SCHWENK operations. So we've got that status that I don't recall exactly how it abbreviates in Europe Union, but actually, we've got that status. And this is very important, like a green ticket to get that subsidies, because all -- let's say, all other projects that are taking place in Europe, we are also in the same trend, meaning subsidies for them also is very important. So I would say the first stage is accomplished according to our expectations, and we are in the second stage. But of course, a lot of things should be done.