Fastned B.V. (FAST.AS) Earnings Call Transcript & Summary

Hello, and welcome to the Fastned H1 Financial Results. My name is Laura, and I will be a coordinator for today's event. Please note, this call is being recorded. [Operator Instructions] I will now hand you over to your host, Michiel Langezaal, the CEO, to begin today's conference. Thank you.

Thank you, operator, and a warm welcome to everyone on this call as well as to our webcast viewers. The presentation used during this call is available on our Investor Relations website. You can find that at ir.fastnedcharging.com. The cover page shows a project I'm very proud of. Last month, we completed a massive upgrade to one of the largest and busiest stations in the Netherlands, Den Ruygen Hoek-West. The service area close to the motorway that passes Schiphol Airport on the route from Amsterdam towards The Hague. With around 100,000 vehicles passing by every day, the scale we needed here was so significant that we also decided to rebuild the entire station with the new type of canopy. As you can imagine, I'm very much looking forward to seeing the uplift in revenue at this station after the Dutchies return from their electric holidays and find out that one of our top stations, which was often quite busy in the past, had a massive upgrade and became twice as large. We want to make sure that the station always is a place for them to charge. Slide 2, please. With reference to the information provided in these slides and discussed during this call, please take note of the disclaimer, which brings me to Slide 3. My name is Michiel Langezaal, I'm the CEO and one of the founders of Fastned. Victor van Dijk, our CFO, is also present on this call. Together, we will present this webcast. Today, I will elaborate on the highlights of the first half of 2024, we will discuss the current market situation and sentiment, and we will look ahead to how we foresee developments and what this means for Fastned in the coming periods. As always, we will talk about the progress made in acquiring new locations and the construction of new stations. After that, Victor will take over and take you through the financial results for the first half of 2024, and we will also update you on our station metrics. After our presentation, we will be happy to answer your questions. If possible, please limit them to 2 questions per analyst, so we can give everybody the opportunity. We've scheduled this call to last for 1 hour. That brings me to Slide 4. Let's start with revenue growth. Fastned's revenue grew strongly to EUR 37.8 million, which is an increase of 45% compared to the first half of 2023. This is driven by the continued strong growth of electric vehicle fleets in Europe. Note that the EV fleet in Fastned's markets grew by 38%. In the broader space of listed companies active in e-mobility, this is an extraordinary achievement as many are currently struggling with the current market situation, parties that sell Wallboxes, for example. So Fastned is doing great. Our revenues have risen to EUR 37.8 million, growing towards the EUR 100 million annual revenue milestone. And as always, we have been able to outgrow the market as sales grew by 50% and EV stock grew by 38% in the same period. This also shows the resilience of our business model because Fastned sells electricity to the entire fleet of electric vehicles driving around, which is a recurring and growing form of demand. It is significantly less impacted by the temporary volatility of electric vehicle sales. About profitability, we continue to outgrow the market while delivering margins that are at or above target levels. With the continued scaling of revenue and having very solid positions in key European markets, it starts to provide significant freedom to continue to take the lead in setting the market price. Also, knowing that we have a very, very significant lead in station economics over others in the market puts us in a very strong position and a very strong pricing position. This is something that many had not expected to happen. They thought Fastned will be under pressure from others. But instead, we are in a position to lead the way. Taking a look at the figures. The underlying company EBITDA has grown by 14% to EUR 3.2 million, the figure that decreases as a consequence of Fastned scaling its expansion efforts and a figure that increases as a consequence of scaling revenue. Increasing EBITDA while at the same time, expanding at a high pace and outgrowing the market is an extraordinary achievement, I think. Moreover, these results are in line with our plan to reach a positive underlying company EBITDA for the full year 2024. Also important is cash flow and funding. As we continue to make massive investments in the expansion of our network, net profitability will, as expected and planned for, remain negative for some time. However, the scaling of revenues does lead to a quickly improving operating cash flow, which in the context of what we're doing might be a better metric to look at. Operating cash flow improved from minus EUR 2.5 million in H1 last year to minus EUR 1 million over the last 6 months. The significant scaling of revenues ahead of us puts Fastned on the verge of starting to self-fund investments in new stations. Note that this is very, very different from the vast majority of players in the market, which have very different magnitudes of revenue per location. Fastned is years ahead when it comes to commercial traction. In this context, I would also like to mention the issue of a record EUR 61 million in bonds in H1 2024. This allowed us to fund our expansion efforts for the last 6 months, and it improves our cash position to EUR 145.8 million. These 2 achievements are unique to Fastned and give us an incredible amount of freedom in expanding our network at speed without the risk of debt covenants that are currently plaguing others in the EV space. Both are providing interesting leverage for shareholders. Energy delivered per station was 403 megawatt hour annualized in Q2 2024. This is up 29% from the previous year, a little lower than the BEV fleet penetration growth of 31%. As in the previous quarter, we took a look at what is causing this. The data again points towards the volume that in 2023, shifted from AC to DC charging, as a consequence of the higher pricing of AC in the wake of the energy crisis. This volume has shifted back somewhat with the AC charging provided by municipalities being more attractively priced again. Last but not least, on the people side, I would like to mention that I'm very happy that Francoise Poggi will be joining us as COO. This will again allow me to have more focus. Previously, she was responsible for Tesla's European supply chain and enjoyed similar roles at Sonos and Cisco Systems. I think Francoise will be of tremendous value to Fastned, helping us to further scale across geographies. I will save the discussion of our record high location acquisition results for a little later when showing specific slides on the topic. Let's now look at the electric vehicle market. Moving on to Slide 5. The media tells us that EV sales are down repetitively. The question is, is that true? Actually, European electric vehicle sales have grown. European EV sales have grown by 1.3 percentage points from 703,000 cars to 713,000 cars. When we exclude Germany, European EV sales have even increased by 9.4 percentage points. Germany is a bit of a special case. As due to unforeseen budgetary measures, the country had to very suddenly stop EV subsidies in December 2023. So the EV market is growing, although at the moment, slower than analysts might have expected or hoped for. But given the circumstances, I would say that EV sales are actually very, very strong. Why? Well, firstly, people continue to buy EVs despite subsidies being significantly reduced, a move that is a logical result of the market growing and reaching its price parity point, but obviously, taking away subsidies as an impact. So the market still showing growth is amazing. And there are more reasons, which I'll talk about in the coming slides. Slide 6, please. For more than a decade, the entire industry has been focused on reaching the moment when it will be possible to produce an EV for the same price as a fossil car. The introduction of the Tesla Model 3 marked this moment in a large car segment several years ago. In the coming year, the Renault V and other models, such as the Electric Fiat Panda will bring price parity and great EVs that can compete with fossil cars to the smaller EUR 25,000 segments. In more recent years, many analysts have predicted battery prices to enable a proper and at par electric vehicle offer in a EUR 25,000 segment. The learning curve for batteries would bring down prices by 25% with every doubling of capacity produced. The thinking was that this would allow for around EUR 50 per kilowatt hour by around 2025-2027. Note, that market leaders such as CATL have already achieved this price point this year. So what has caused this to accelerate? And what could happen beyond this point. But continued increases in production scale and matching price reductions, it is not hard to estimate $8 per kilowatt hour by 2030. The price level for battery cells, that will be a game changer for the industry. This development was hard to believe for most analysts, good to learning curve not level-off earlier, analyzing the raw material costs for the common NMC technology led many to expect the learning curve to level-off somewhere around the earlier mentioned 50, because of hitting the barrier of raw material costs. In the last few years, we've seen LFP technology make huge improvements. Originally, many considered this battery technology unsuitable for cars because its power density was low and energy density was mediocre. Smart innovations have led to breakthroughs here. For example, the pre-heating of the battery for which we have to thank Tesla was the answer to making fast charging possible for this type of battery. LFP has now become a very capable battery technology to using cars. And as a nice proof point, the recently launched Zeekr 001 is one of today's fastest charging cars with charge speeds well over 500 kilowatts, and it holds CATL battery on LFP technology. So why am I telling you all of this? Well, LFP batteries have a far lower raw material costs and contain practically no rare-earth materials. The raw material barrier for this technology lies more in the order of EUR 11 per kilowatt hour. This is why battery prices have dropped faster than expected. More importantly, it will not only enable an at-par great electric vehicle offering in a EUR 25,000 segment, it will flip the market and soon stop the sale of fossil cars altogether. Producing fossil cars will simply be too expensive beyond 2030, which brings me to Slide 7. Now after having discussed the recent news on batteries, which significantly improves the already bright long-term outlook on the EV markets, I would like to zoom-in on what is happening today. What makes me claim that the EV market is strong, talking about the middle part of the slide today. Many of the first EUR 25,000 cars have already been shown to the media and specification and pricing have often already been released. All signs point to OEMs trying to push the start of deliveries towards 2025. This would support them in meeting the EU regulations to become stricter in 2025. Furthermore, it looks like they would like to see if they can make people choose to buy one of their currently more profitable fossil cars until then. Whatever the reason it is on a time line of months, Fastned is investing for the long-term. And what is absolutely clear is that these cars are coming, and the scale is a magnitude larger than the previous segments that we electrified. This is why the next phase of EV market growth is on our doorstep. After discussing the reasons for OEMs to decide the timing of their offerings, let's also talk about the timing of the decisions of consumers, and this brings me to the Osborne Effect. The Osborne Effect is a phenomenon for the announcement of new more advanced products can significantly reduce the sales of the current offerings as consumers await the new versions to become available. Applying this to our market situation, with so many new better and more attractively priced models coming on to the market in the coming months, the Osborne Effect would suggest consumers prefer to wait and significantly reduce EV sales. And this is not crazy. Personally, for example, I am currently driving a short lease vehicle. I had to hand in my previous lease, given that all potential lease extensions were exploited. While at the same time, the ordering option for the long wheelbase ID buzz, the car I want to order has been postponed several times. Some one of these people who waits, as for my big family, the car I want is on the horizon, but not yet on order. So many consumers are currently awaiting the ordering of their vehicle of choice. Secondly, subsidies have been brought in line with the scaling of the market and the price-parity point being reached. And still, the EV market is growing. That shows its strength and resilience. The awaiting orders and the opening of a new segment of the market to be electrified, which also is a magnitude larger than the previous ones is why the next phase of market acceleration is on our doorstep. So that is our view on the market. And this is why we are continuing our efforts to expand our network, which brings me to Slide 8. More than 10 years ago, I started this company to build the infrastructure to set free the electric car, build the fast-charging infrastructure that is needed to allow electric cars to drive around and for people to make the choice to go electric. 5 years ago, we celebrated being a leading Dutch fast-charging player and listed the company at Euronext Amsterdam. The idea was to raise funds and grow the company into a leading pan-European charging network. Europe has some 10,000 very high-traffic petrol stations. And the milestone we set ourselves for 2030 was to get our hands on 1,000 similar, very high-traffic locations, including a serious number of great motorway service areas. That would roughly translate into a Top 3 to Top 5 position in Europe's key markets. Today, we can announce that we have reached the halfway point, something I'm incredibly proud of. Moving on to Slide 9. In the first half of 2024, we saw the continued acceleration in the acquisition of high-traffic locations, securing 76 new locations. This is our fastest acquisition base ever. This leads to 509 locations signed at the end of this quarter. In the last 12 months, the acquisition speed of new locations has been above 100. That means we are fully on-track to reach our goal of 1,000 stations by 2030. So the investments made in the network development, location, design and construction teams to be able to reach out to more land owners to be able to develop more relationships to investigate and design more locations and to be able to do site due diligence at scale are paying off. Furthermore, with the revenue per station falling over the last 5 years, Fastned is now successfully competing with the retail development players to secure private locations along high-traffic roads, is the outsized revenue per station we realize that allows us to tap into the new pool of opportunities, opportunities that as a consequence of different station economics do not exist from many others in the market. Let's go to Slide 10. And we are not diluting our criteria in order to achieve scale. We continue to expand our best-in-market charging concept to these A+ high-traffic locations. What we do is scale the acquisition of great high-traffic locations. And yes, that is the difficult thing, which makes me even more proud of our team to be able to have achieved a record level of new locations in the last 6 months. And this brings me to Slide 11 and handing over to Victor Van Dijk, our CFO.

Thanks, Michiel, and also from my side, welcome all to the call. Since Fastned's inception more than 10 years ago, we have been focused on building large visible and efficient charging stations on high-traffic locations and delivering a great charging experience, just like Michiel explained, which is actually hard because these valuable locations are hard to secure and building large station requires building permits and grid connections and vertically integrating our business and make it a vision takes a lot of time and efforts. We have seen other charging companies taking an easier route by putting charges on parking lots of others, mostly low traffic and outsourcing most of the key charging company functions like charger management software, maintenance, customer support, design and construction management. That is quicker in terms of putting down chargers, but the value generation, both for the EV driver and the charging company is much less in our view. So we have been scaling the hard thing. And by now, it's evident that this is paying-off. Building great and large charging stations on high-traffic locations and operating them really well through a vertically integrated business model leads to a predictable high session growth that scales with the BEV fleet penetration. And this is relatively independent of what other charging companies do on low-traffic locations. You can see that in the graph, which shows development of sessions per station per day for the top 10 fast charging companies overall in our markets. Ultimately, Fastned is scaling the hard thing, leads to high customer value, high investor value, with strong revenue growth and high return potential, and it drives the transition to electric mobility to mass. Next, let me put some volume growth into context here. Most of the fast serving demand growth happens in the second half of the year. Why is that? There are 2 main reasons. One is that electric vehicles have structurally higher charging demand in the winter. Battery trains are less efficient and driving requires more energy in cold weather. Also, people simply drive more in cold and rainy weather. This leads to a structurally higher demand for fast charging of 20% to 30% in winter versus summer. So with the steady state BEV fleet, our sales will be 20% to 30% lower in summer than in winter. But of course, the BEV fleet is not steady and it's growing substantially, which means that the sales growth is almost flat in the first half of the year instead of 20% to 30% lower. And in the second half of this year, we've had double-whammy of continued EV fleet growth plus the seasonal effect of higher demand in the winter. Other things to mention [indiscernible]. These days, many people use their electric vehicles to go on holidays. And this leads to increased demand in holiday travel countries like Germany, France, Belgium and Switzerland, which we see in our current trading for the third quarter as well. Overall, Fastned's Energy delivered grew by 50% year-on-year, outgrowing the 30%, 38% electric vehicle fleet growth in our countries, which is a great result. As Michiel explains, electric vehicles continue to hit European roads, causing higher and recurring fast-charging demands, and we demonstrate we are able to capture that demand through our high-traffic locations and award-winning charging concepts. On station economics, let me start-off with the following. As I explained 2 slides back, we have one of the highest sales per station in the market, 3 times to 4 times more than many other top 10 fast-charging CPOs, which is a huge difference. This provides financial flexibility by being in the driver seat when it comes to any price changes and tender and rent billing, whereas others still have to deal with negative to low station profitability. We saw sales per station increased by 29% year-on-year. This is slightly below the fleet penetration growth of 31%. The main reason for that like we saw in the first quarter is a normalization of slow charging uses in the Netherlands, currently, our biggest markets. We saw relatively high public slow and home charging costs in the Netherlands in Q1 2023 and later in 2023 in the wake of the energy crisis before normalizing again over the last months and quarters. This has shifted some volume to fast charging early in 2023, and we see it shifting back to slow charging again now. Overall, we see public slow charging share trending down and public fast charging share trending up in Europe, in line with our analysts expectations. In terms of fast charging market share, we have visibility on other fast-charging companies. And there, our market share was actually relatively stable over the last quarters and years. And we also saw Tesla Supercharger usage growing at similar growth rates at Fastned. With station sales going up due to BEV penetration and with a high operational leverage, our operational EBITDA margin is again at 40%, our guided level for 2025. With the EV penetration expected to double by 2026, and 5-fold by 2030, we continue to track towards our target of EUR 1 million revenues per station in 2030 and more than 40% operational EBITDA margins. Next slide, please. In the first half of the year, we again saw strong revenue growth at 45% and volume growth at 50% year-over-year. And this is really driven by 2 big growth drivers. 1 is organic growth at our existing stations. And this is a plus 29% year-over-year. This is volume growth at 244 stations we had operational at the start of last year. The driver of this is electric vehicle fleet growth, which increases recurring charging demand. This is obviously a great organic growth driver to have. As with the technology and cost developments that Michiel described, this fleet growth is only going one way and will be a growth driver for the next few decades. And trends we see, like fast charging taking a larger share of charging demand, growth and autonomous high-mileage electric vehicles potentially on the horizon only adds to this growth. Fastned is uniquely positioned to capture this organic growth with our existing locations at high-traffic locations and with our award-winning charging concepts. And we can cater for this growth at our existing stations in multiple dimensions. As we deliberately [indiscernible], as you can see when looking at our current utilization, also, charge speeds will increase, meaning we can double or triple sales in that dimension alone over the rest of the decade. Also, almost all of our stations have expansion as we planned for already, so that we can simply add chargers to satisfy demand. Our other big revenue growth driver is obviously securing new stations and deploying our award-winning concept on that. As you can see, we are able to ramp-up sales from them quickly. We have increased the number of stations by 31% since last year, and they already contributes 21% volume growth. Knowing that 1/3 of those stations were only opened in the last half year, this shows that the new station ramp-up sales to existing station levels within a short period of time. We're securing new locations at a record high level this half year and with our station building pace ramping up, the inorganic growth from new station openings is also a very important revenue and volume growth drive. Apart from revenue growth, we have seen gross margins stabilize post energy crisis. Note that we have seen many of the other Top 10 fast charging company actually increasing their pricing, which we feel is logical because they have significantly lower sales per station. So the increased pricing to attain some level of profitability. Further, we continue to see operational EBITDA expanding significantly, 5-fold only in the last 2 years. With the revenues 3-folding over the same period, this clearly demonstrates the operational leverage we have in our business. Net profit is still negative. But what we see is that it is at comparable levels to our network expansion costs now. And these costs come with our expansion efforts, which we are keen to undertake as we see the potential, and we continue to see very attractive IRRs on new projects. These expansion costs are mostly taken in the current periods and therefore, negatively impact our current profitability, but obviously, the yield of the 15-plus-year lifetime of the new stations built. Overall, our numbers all numbers are trending in the right direction, underpinned by very strong structural growth drivers. Next slide, please. We have a very strong funding position. Our operating cash flow is near positive. For many other companies in our industry, are still significantly negative. We have a strong organic revenue growth, as explained on the previous slides, requiring little to no further investments. which is obviously different from many other companies in many different industries, where substantial growth only comes after further investments. We also have a high cash on balance at EUR 146 million. Further, we have a unique self-developed retail bond program with more than 10,000 retail investors that want to support a leading company in the energy transition and that we provide with a good return of 6%, many of them being EV drivers and our customers. This is a very valuable program for us as it provides significant volumes of funding, but does not limit our financial flexibility as it has no financial covenants. Combining all this, we expect to fund the full 2024 and 2025 rollout from cash on balance and further retail bond issuance. We also expect operating cash flow expansion and continued retail bond issuance to fund at least a considerable part of further expansion beyond 2025. Then we see other non-dilutive funding options like bank financing becoming available to the sector with several examples in the market this year. This, we obviously monitor. N summary, we are able to significantly expand operating cash flow organically, and this part does not need further funding. On top of that, we have a very strong funding position to expand operating cash flows through investments in new stations.

Thanks for talking us through the financials and providing as many of your insights, Victor. This concludes our presentation for today. Moving on to Slide 16. On this slide, we have summarized our guidance for 2024 and 2025 as we presented last quarter. In closing, I would like to say looking at the facts, the electric transition is well on its way. The electric vehicle fleet continues to increase and a wave of more affordable new models with more range is on our doorstep. All are enabled by rapidly developing battery technology is still relatively young innovation in the car industry that drives an unstoppable and accelerating path to a complete transition to electric mobility. It will be full hearty for any carmaker to reduce their focus on EVs. Just think about it, how would they compete in 2030 when EVs are cheaper to produce and fossil cars. Sure, you can call me an optimist. And through this, I probably am, yet, I invite you to take a close look at the insights we shared. And on that note, I would like to thank you all for listening. I now hand the word back to the operator for questions.

Thank you. [Operator Instructions] We will now take our first question from David Kerstens of Jefferies.

I've got 2 questions. First, on the utilization of the network, I think, was a little bit lower on a like-for-like basis in the first half of the year. Can you explain the key drivers? I think you talked about the shift back to the home charging market, AC charging, which is probably a bit more pronounced in a weaker EV market that you experienced in the first half of this year. When do you expect that driver to reverse back towards fast charging and drive your utilization of the network and also the operational leverage? And then the second question is on the cost development. It seems that the operating cost per charge have increased relatively strongly in the first half of the year. Do you expect to see further cost inflation in the second half? And also, the development cost, it does not look like you're holding back on the development in a weaker EV market. Are you still on-track to double these costs to EUR 50 million next year versus 2023?

Do you want to start with costs or…

Yes, I can start with the cost. Indeed, operating cost per charge increased on an annualized basis to EUR 16,600 for the first half. The guidance we gave was around EUR 16,000 for the year, and that's actually still the guidance so that you can still take as an assumption. Development costs, same story. We don't hold back indeed. We do see the opportunity as described. But our guidance on that remains unchanged with a doubling over the period you mentioned.

I think regarding utilization, I think we already explained the seasonality effect in that sense. So I think what you see there is that utilization is a time-based figure, whereby, let's say, the sales are kilowatt hours. And over the summer, you often say from winter towards summer, you see charge speeds improving. So that also has an effect. So I think basically that there's a combination of these things that is at play there.

Yes. So the second half will be better?

I would say so and as a consequence of that double whammy that Victor explained, right? Like every year, you basically towards summer, you see -- yes, you see basically cars needing less energy, people more often choose to not use their car until it starts to become summer break, which ends up in the Q3 figures. And then basically summer break and afterwards, people see sort of temperatures falling, it becomes autumn, starts raining, people start using their car more often and the energy that these cars need to drive around to basically cover the same around the mileage is higher. And then basically, you see utilization going up again, whereby also charge speeds are often a little bit lower, which improves the utilization significantly because the utilization is time-based.

And we'll now move on to our next question from [indiscernible] of ABN AMRO.

My first question is on the funding. You report excluding expansion costs, CFFO of EUR 11 million in the first half already. So I would say with the winter factor coming, probably something like EUR 25 million then for the full year 2024. And back of the envelope growth of 30%, 40% next year would be in that EUR 35 million to EUR 40 million in 2025. So can you say anything more on future spending for your growth expansion after 2025.

Yes. I think, indeed, the fact that we're operating cash flow near positive puts us in a very positive position, as I mentioned, in an autonomous position. I think beyond 2025, I think what we see right now, of course, is our share price developments. And there, yes, we think the current share price does not represent the value of what we've created over the last years. That's very clear. So equity issuance will be extremely dilutive and unattractive. So that part, that would be unlikely. At the same time, we see, of course, many other funding options. We see them all time and we make -- always compare them and pick the most attractive one of them. And one of the options we see becoming more available as bank financing for charging companies. And we've seen a couple of examples in the market this year. And obviously, that is clearly something we monitor as well.

A follow-up question on the growth in the number of charging points, as it looks like clearly lower than what we've seen before. So should we see it more or less that we here see your, let's say, cost flexibility in reacting on a slightly slower growth in the BEV markets than hoped for or expected earlier?

No, I would not say that they're connected. I think basically, the connection that we put is much more towards the barriers in this market, permits, development time lines, grid development, et cetera, et cetera, that basically leads that and the time line to develop a site is often somewhere between 1 year and 2 years. And that means that, that pipeline needed to accelerate to accelerate also the construction of new stations. And in that sense, I'm just really, really happy that we see that pace of acquisition increasing, and that will allow us, in due time, to also increase the pace of building new stations. And that is basically something that works over a time line of years while, let's say, the current market situation is something that we look over months, I think we talked about that. So yes, basically, significantly more long term…

The question, on the rollout of existing station seems to be less aggressive than before. I fully agree that you fully roll-out on your, let's say, new geographies.

So you're more questioning like the expansion at existing stations?

Correct. Probably more related to your utilization levels and if you see them not growing fast, then there's no reason to add more charging points at that moment in time, probably.

True. And I think we also see sort of the typical sort of, let's say, simultaneity factor that we see in the entity grids into play. So having, let's say, 4 charge positions, if you then hit the utilization of 20%, then it already starts to have an impact on the customer potentially. But if you have 8 charge positions or 12, then that simultaneity factor actually allows you to run the stations at significantly higher utilizations without impact to the customer. So basically, the expansions in the past also allow us now to actually not necessarily expand them that much or that early on. I think that is the main factor. I think, basically, let's say, an a charger station, you can run at a significantly higher utilization without impacting customer experience than a 4 charger station. So that is why the expansions were significantly higher in the past than now.

We will now take our next question from Jeremy Kincaid of Van Lanschot Kempen.

I also have 2 questions. Victor, just the first one on the network operating cost. I thought you said that if we assume EUR 16,000 per charge for the full year. If I plug that into my model, I get to EUR 15 million for a total cost for the half year, which is obviously the same as the first half, second half versus first half, which would be quite odd compared to history as network operating costs have actually increased sequentially every half year. So could you just provide some more comments around why that number might not rise as much in the second half compared to history? And then the second question also on funding. You've obviously done a very good job with the retail bonds, but I see there's also nearly EUR 1 billion government loan that you managed to draw-down and also EUR 10 billion that you managed to draw down from the [indiscernible]. So I was just wondering if there were any more lines available from those 2 sources or if there are any other sources of government style funding that could help you bridge the gap in future years?

It's good that we're achieving scale that…

So the EUR 10 million is related to the SUV in France. And that is for a specific set of stations. And most of them have -- almost all of them have been built already and we can do some expansion from that. So that is there. It's very helpful, but it won't scale significantly. I think overall, it's more -- and then the EUR 1 million example is part of the Germanization scheme, the German regional tender, where we opened one station and basically effectively what they provide is a 0 interest loan where they funds part of the CapEx, and then we repay it based on kilowatt hours sold. And that will scale and that's all part of the context of the German tender, and we talked about that before. But overall, if the schemes are available, we'll use them, of course. But I think the more interesting part is the [Technical Difficulty] I talked about before. And to your earlier point on the charger costs. So of course, number of charges increased by 20 -- by the second half. So that indeed should increase network operating costs. And so in the first half, there were EUR 16,600 per charter in the second half where we say around 16,000. So if you want to be conservative, you could take the same level. But I assume the number of charges increases in your model, so the absolute costs should increase.

Okay. Sure. And could you just make a comment on whether or not you're seeing continued cost inflation or if you're seeing cost pressures moderating across the board?

You're talking about cost inflation on grid fees or…

Grid fees, but anything that you want to call-out?

Yes. So what we have seen is grid fees increasing here because of inflation and the effort that grid companies have to undertake in this energy transition. And we also see there's one effect and the other effects, higher uses, higher charge rates, which come with actual grid costs. And there's the effect you see in the operating cost.

And that's also sort of -- basically, those operating costs increasing are also in the investment into the future scale of operating that station, right? So basically the highest peak at those charging stations to some extent set sort of the cost level. And yes, that basically is an investment in operating that station in the future at these sort of charge rates.

And we'll now move on to our next question from Thymen Rundberg from ING.

I have 2 questions on international expansion. The first one around the Deutschlandnetz, and you added a significant amount of Deutschlandnetz stations to the pipeline in quarter 1, specifically, in quarter 2, this was a lot lower. Can you just give us an update on how you're progressing with acquiring locations in the regional Deutschlandnetz. And then the second one is about besides Deutschlandnetz locations, you also added stations in every country in the first half of the year, but not in Denmark. You only have 1 operational station and 2 under development. And I was just wondering, if you look at other countries that you have recently expanded to Italy and Spain, we see a bit higher pickup. Yes, what's going on in Denmark? Are you perhaps focusing a bit more on other countries at the moment or maybe the Deutschlandnetz. In short, what are your goals for Denmark?

I think to start with Denmark, I think it's one of the countries that's on our agenda, but the development in that sense of a team of our commercial efforts to expand the network, they have to start at the later base than, let's say, a later point in time than in Italy and in Spain. And as a consequence, the ramp-up is later. I think the reason why you saw the popping-up of those first maybe at an earlier point, and maybe you've seen them in Spain. This is a consequence of winning tenders so we have to publish, whereby basically in Spain, for example, it's more like a couple of commercial deals that you see ending up in the pipeline, but not notice basically as a country being opened. So there's a bit of a time lag in, let's say, the moment when it ends up in our reporting. So no, let's say, big differences there. It's just a time line difference. I think when talking about the German expansion, I think we're extremely happy that we -- as basically the first party in the market that was to open the station in [indiscernible] as one of the regional tender locations. But I also have to say that, in that sense, maybe was very special because the entire development of that regional tender scheme is planned over, let's say, a couple of year period, whereby these locations have to be developed, found, contracted. And that is going according to plan, but that plan also means like we're not going to see them tomorrow.

I think you referred to the signing side of locations in Q1 versus Q2 and what you see with the regional tender, there's number of set deadlines where you need to show locations and get them approved by the authorities. And 1 of those headlines was in Q1. So that led to, yes, the concentration in Q1. I think the next deadline, I don't know on top of my head, but it wasn't in Q2 and will be in the second half of this year, tied to specific.

And we'll now move on to our next question from Nikita Lal of Deutsche Bank.

I have also 2. My first question is on the private location. So I understood that the expansion cost of acquiring private locations are higher because these are negotiated individually. Just wanted to ask how it is when you have these orders now in the pipeline, is the time line of building these stations is the same like the public ones or if there are also differences. And my second question is regarding your mid-term objective. Now that you've nearly reached 40% operational EBITDA margin, if you intend to revisit your target?

Yes, with the last one. Yes. We've had the operational EBITDA margin target at 40%. We've recently or nearly reached if you look at the first half. Yes, I think it's too early to revise that target. I think it's also fair to say that, and I talked about this more in the last call is that what you see is that with increased station sales, you see that there's an ability to, at some stage reduce prices and because basically, if we would keep the same prices and continue to grow station sales, you get to ridiculous returns. And that is not sustainable. So at some stage, the returns indeed will allow us to reduce pricing.

We'll also be in line with our mission. So I think maybe the sustainability is also maybe linked to whether we want to achieve that.

Yes. And I think it's basically too early to call where that balance lies. It is a new market. We are leading that from a returns perspective and that puts us in a very strong position with regards to pricing. But it's also something we need to experience and learn, but I think we can be very happy with that where we're at our targets this year already. I can't provide any further information on that.

And then maybe regarding private sites, I think, let's say, the time lines, I think, can be shorter here and there because when a contract is there, it's there. And let's say, the regulation that we see for public sites, which are often also motorway related is often that there's additional regulations, so additional permits to be issued or additional, let's say, check-marks to be set. That said, in general, there is a bit of an erratic behavior from site to site. So there will be sites that will be difficult in sites that will be easy. But I would say, generally speaking, the time line of private sites could be or is a little bit faster than public ones. Yes. I think cost-wise, I think you're right. I think like doing one-on-one negotiations might simply lead to more people efforts and more specialized work. But the positive in that sense is also that you also pick and choose. So tenders also come with a portfolio often. So there is, in that sense, a bit of a, let's say, a weight advert. Does that give you a bit of color on that topic? It's maybe not a complete answer, but.

Yes, it was good.

We will take our next question from Mahaut Arnaud of Bryan, Garnier & Co.

I was wondering if you have experienced any issues related to grid connection delays. If so, do you potentially see any improvement this quarter compared to previous quarters? And do you have any expectations for the rest of the year?

Yes. I think basically, the situation, I think, remains similar to last year. So we do see that the electricity grid in the Netherlands, where this is most profound is under significant pressure. I think if you look at the developments in the country, there is still a pipeline of sites under development by Fastned, Those are sites where the far majority of them already have a connection that was developed, so the connection capacity has been claimed or is there. But it does hamper, let's say, us and others to further expand the, let's say, the charging network in the country. Yes, I think what I would say is probably on a technical basis, there is not that much happening yet. What we see is that on the policy side, the government and regulator and grid companies are trying to find solutions to the issue, whereby I think the key there is, on a nominal basis, the grid is full, you might say, on a non-nominal basis, so basically, the capacity on an hour-by-hour basis, there's a lot of room in the network still. So the question is really how they can start now to optimize the usage of the grids in a more digital way. But that will probably take some time. So I think that is not tomorrow. And I think that basically, in the end, also shows the strength of the position that we have in the country and the value and the work that we did very, very early on. And I think we could expect or we'll expect this to happen in other countries. We see similar signs in the U.K. where the network is under pressure as well. Belgium, we might expect similar things, but the network is maybe a little bit stronger or more conservatively built than what we've seen in Netherlands and similarly in Germany. Maybe in France and, for example, Switzerland or Scandinavia, we will see less of this because there's much less of, let's say, fossil generation to be converted to solar and wind. So there's much less of change in the electricity grid. Does that give you a bit of context, it's a bit of a long story, but.

Yes, that's very clear.

I think it's really the time line that we're talking about, is not months. We're talking about a couple of years. And that also shows the barriers of entry to this market. It's like many people think that you could place a charger somewhere, but it's definitely the electricity grid or the supply line to those stations that are starting to be of key and key importance.

And we'll now move on to our next question, a follow-up from Jeremy Kincaid of Van Lanschot Kempen.

Just a very quick follow-up from me. You mentioned that after FY '25, you might look to get other sources of financing and that there was evidence in the market that others had been able to do this. Could you just provide a little bit more color around maybe what the leverage ratios were that the banks were happy to lend to, just something to -- for us to get our hands around to better understand the market dynamics would be helpful, please.

Yes. Let me be clear. I mentioned that this is something that potentially as an option and we monitor, but we look at many options. So that's the disclaimer. But if you look at those bank finances, you see basically is a bit of an LTV metric they take. And so how much of the CapEx pay funds, often is SPV like structures, non-recourse structures. And then the LTVs are in the tune of 50% to 70%, which is -- that's the part of the CapEx that's funded by the banks. I guess that gives you the number, right?

Yes. And do they require the assets on the balance sheet valued a certain way or would they be happy with your current methodologies?

Actually, sorry, I don't get your question. The assets on balance sheet. Could you repeat it.

Do you have to value the assets on the balance sheet in a different way or are they happy with the current methodologies.

Yes. It's my impression they don't really look at accounting. And in any case, we account on a cost basis. So I think that's not a topic, to be honest. It's about part of the CapEx they want to be able to fund. I don't think that's a topic.

There's a follow-up from [indiscernible] of ABN MRO.

Can you maybe give a bit more flavor on the growth in your staff base? Where are now, where do you want to be at year-end? Secondly, can you maybe explain why you only separate Germany as, let's say, the second country, well, meanwhile, Belgium is larger and France larger from an asset base perspective, meaning when can we expect more detail on developments in Belgium and France, maybe. And finally, a very small one. There is a provision taken in the first half, a very small one. But of course, on reported EBITDA relatively large. Can you maybe explain what is about.

The provision? Which provision do you mean?

In your report, not in your presentation pack but in your report on page, what is this, Page 20, I think there is a table overview splitting operational expansion and depreciation and amortization. And there is a pressure of almost EUR 700,000 on the reported EBITDA because of depreciation, amortization and provision, so I assume provision or an impairment, something like that, meaning that excluding the impairment and the reported EBITDA would have been EUR 4 million, not EUR 3.3 million.

Yes. What we see there is that, that is actually goes back to collecting some of the revenues from some of the customers where we see -- yes, it's a bit comparable to if you look at the petrol station where people get gas and drive off. In the charging sector, you have that as well, where people get in accounts start charging and some of them don't pay. So that is the effect you see here. And that's something -- obviously, something we are working through to minimize that. We've taken a lot of steps in that already. And that's something the charging sector as a whole meet go through. So that is related to that.

I would say, ordinary right, is a payments that just failed to be paid. And then you have follow-ups. So basically, it's like step-by-step automization of the entire payment process.

And can you remind me of the other questions because…

I have them here. So the other one is FTE outlook, like what our view is and I think mostly, I think, also looking for how to model it, right? And then the segment accounts. So I think originally, we chose to have segment accounting with Germany as the first separation as a consequence of the size of Germany at the time. But I think that point is that, that's slowly starting to become different.

Yes. So that's something we will review because you're right, Germany is always used to be our second market, and that is changing. So we will review that and see how we can best present it.

Because you're showing, let's say, your second market, Germany only growing or is it 25% or so, well, your real second market in Belgium is growing more than 100%. And the next big market, France, U.K., also more than 100%.

So we're understanding what you're saying. And its partly also the speed of change in the sector compared to sort of sometimes the value of presenting things in a similar fashion, right?

In terms of employees, we're now at around 300 FTEs. So quickly ramping up. I don't actually know the exact number for the year-end on top of my head. It also depends a bit on how quickly we're able to scale that. And then I think you had the best guidance you can take us regards we provided before on network expansion costs and also the network operation costs.

I think what I would say is I think if I look at our hiring, like I think I said like, I don't know the number on top of my head, but I do know that we're roughly according to plan. So let's say, the guidance that Victor provided in terms of financing is in line with our plan. And I think that's actually very positive because in that sense, it does increase costs, but those costs are aimed at seriously scaling sort of expanding the network. So we're very happy if we're able to find these people. There's one final question then. Also finalize the call for everyone because otherwise, we're running out of time.

Sure. We've got our last question from David Kerstens of Jefferies.

I just had a follow-up question on your battery innovation slide, illustrating the falling cost per kilowatt hour. What is your view on the impact of the capacity of batteries getting larger. I think there are now cars being developed with a range of 800 kilometers. Will that lead to a higher maximum achievable utilization of your network? And also all the cheaper models that you expect to come to the market are often also smaller cars, which are likely to be relatively more efficient. I think right now, it's 4 kilometers per kilowatt hour, I think, for the first Teslas but that number will probably go up quite dramatically with the new models coming on to the market. Can you elaborate on how you see that impact of those developments on Fastned, please?

I think, first of all to say, I think there's many. So it's very difficult to sort of to say that there's 1 driver. But I would say, if I would list a couple of them, I would say, bigger batteries and more affordable cars open up the segment. So for example, people that don't have a driveway can't charge at home. If you can buy a car with a big battery that can charge very quickly at a reasonable price, then basically, we have for an average motor is once a week going to a fast-charging station becomes an option then. So you basically see that basically scales, it makes electric vehicles available to more people. 2 is larger batteries lead to more people using their car on longer distance trips. While in the past, they would choose either going by train or taking a fossil car, basically it enables them to make that car being the first one. Three is, we see that it's very difficult in, let's say, densely populated urban areas to develop AC charging country-by-country, utility by utility, you get these messages. It's very difficult to develop that at cost, which basically means that these people are being enabled to buy a car that is electric. I think when you look at autonomous vehicles, big batteries basically would allow them to go to charging stations and charge at basically moments in time when our network normally wouldn't have any customers, right? So basically night-time things. So that is basically maybe sort of the very long-term outlook, but you could achieve significantly higher utilization as a consequence of higher charge speeds due to bigger batteries, faster charging and charging being at times when basically an autonomous vehicle would connect, but a normal human would rather sleep. So I think basically, in summary, I would say there's a long list of things that would improve things for us, whereby, often we see sort of the vocal early adopter say, hey, a bigger battery would actually mean that with less than I would charge fast charge less. So that's bad for operators of fast charging stations. I think that is a bit of a too narrow view that we still too often actually here. Thank you very much, and looking forward to speak again in 3 months' time.

Thanks all. Bye-bye.

Thank you. This concludes today's call. Thank you for your participation. You may now disconnect.