MPC Energy Solutions N.V. (MPCES) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the MPC Energy Solutions Project Update Conference Call. [Operator Instructions] I would now like to hand the conference over to speaker today, Heike Hülle. Please go ahead.

Yes. Hello, and good morning, everybody. I have the pleasure of welcoming you this morning to the third webcast of MPC Energy Solutions. We are today presenting a project update, and we are also presenting the preliminary financial statements for the year ended December 2021. Press release with the financial has been published this morning at 8:00 a.m. After this presentation, we will host a Q&A session, and please be advised that we are recording today's webcast and it will be published later together with a transcript. In terms of forward-looking statements, let me just remind everyone that certain statements made on this call, including financial estimates and comments about our plans, expectations, beliefs or business prospects and other statements that are not historical in nature, may constitute forward-looking statements under the securities laws. We make these statements on the basis of our views and assumptions regarding future events and business performance at the time we make them, and we do not undertake any obligation to update these statements in the future. Forward-looking statements are subject to a number of risks and uncertainties and actual results may differ materially from the results expressed or implied in light of a variety of factors, including factors contained in our financial statements, filings and other releases. Okay, now let me pass over to Martin Vogt, our CEO, for the presentation.

Thank you, Heike, and good morning, everyone. A very warm welcome on behalf of the management Board. We are very glad to have this first webcast here in 2022 this morning. We have structured our presentation in the following sequence in a bit more detail. We'll speak first about the key achievements since our IPO. We will go over then in a second point to the project update and give you on each of the projects and execution and the latest news. Furthermore, we will also give you the big picture update on the portfolio, including movements in our backlog and in the pipeline. And then we move into the financial review of the Q4 and year-end figures, before we are concluding today's webcast with an outlook on the 2022 financials. MPC Energy Solutions is now since a bit more than 12 months at the Euronext Growth segment at the Oslo Stock Exchange, and we believe it's now also a really good moment to reflect on our key achievements during the last 12-month period. And with that we are moving over to Slide #2. Here we are listing what we feel were critical achievements by the company in 2021. Of course, at the heart of our company and most critical for our project focused business, and the company's success, is our team. So we are very happy and pleased with the additional 14 new colleagues, some of which were transferred from MPC Capital, but also from new joiners at our offices in 2021, 60% of which are based in Panama and Colombia, demonstrating also our commitment to build up local capacity and boots on the ground, so to say, which is critical for our project business. Also to highlight, at the moment, about 25% of our colleagues are females, and we will focus on increasing that figure in 2022. Overall, our team is coming from 7 nations to date. When we talk about development, right now and together with our partners, we have about 540 megawatts in 9 countries into the Philippines and Australia, in development. These developments are progressing very well, and also, projects in Philippines and Australia are maturing now, which is certainly different than 12 months ago when those projects were in rather early stages from our partner, Enernet Global. Also, from the stage of development into construction, we have successfully fully moved a total of 5 projects that reached already this stage of construction after a successful financial close and final investment decisions, of which 2 were actually contributed from the initial seed portfolio of MTC Capital prior to such IPL. These projects are having a growth capacity of approximately 100 megawatts, and will become operational during the second half of 2022, generating a significant amount of revenues and cash flows for the company. Also, our first utility-scale hybrid project in St. Kitts with our partner Leclanche will reach operational stage during the first half of 2023. In the meantime, we have also closed the acquisition of our first operational project in Mexico, Los Santos 1. This projects with a capacity of about 15 megawatts or 16 megawatts, has offered also the opportunity for expansion up to 75 megawatts or 90 megawatts in total. Most importantly, it provides MPCES with its first revenues and cash flows. In addition, we are very pleased to share that the CHP project in Puerto Rico generated also its first kilowatt hours with an expected formal commissioning date in the next week, generating gross revenues for the company in March as well. Talking about partnerships, working in development markets, risk management, diversification and local sector expertise, is a key tool for capital preservation for a company. Hence, we believe in value creation and the complementary partnerships. Our joint development companies which are Akuo Energy and Soventix to develop and build solar projects in Colombia and the Dominican Republic, are equally important, as partnerships with sector experts such as Enernet Global, for distributed power and markets like Puerto Rico, the Caribbean, Philippines or Lincolnshire for stationary storage and hybrid projects. With that, we are moving over to Slide #3. We just want to reiterate our commitment to be a partner of choice for the private and public sector and our 4 asset classes: Solar PV, wind, hybrid and energy efficiency. Our focus in 2021, as you saw from the previous slide, was clearly on Solar PV technology. But for 2022 and 2023, we will very likely add more storage, hybrid and energy efficiency projects to our portfolio as well, to create a balanced diversification among those 4 asset clusters. We overall see very strong demand from the private sector for low carbon and green power supply in our existing and key markets. Those are usually coupled with other measures, such as energy storage, or the production of steam heat or lighting. In our existing markets, the power from the grid remains usually carbon-intensive, expensive and unreliable. Hence, renewable energy remains a very compelling alternative for the private and public off takers. The latest upswing in LNG and natural gas prices in the Americas, make renewables only more attractive as a viable alternative. We're moving to Slide #4. At the time of the IPO, we started with the development projects in Colombia, Jamaica and El Salvador. Now 1 year later and during the last 12 months, we have entered in total of 4 new markets in the region: Mexico, the Dominican Republic, Puerto Rico, as well as St. Kitts, in which 2 we have already operational assets by now. Meaning, a strong growth presence in our key region has been completed. With that, we want also to give you the update on the project itself. So we are moving to Slide #5. As mentioned before, the efforts in Puerto Rico is now generating its first kilowatt hours. Detecting procedures has been concluded. We received also the formula approval of the grid operator LUMA Energy, which was missing until very recently. Our team -- as you may have seen, our social media posts have also been lately on site, being very pleased with the performance of 2g as CHP manufacture for this project. The asset produces steam heat and power to Neolpharma, which is a Mexican pharmaceutical company, that produces in Puerto Rico for the U.S. market. I also would like to highlight that this is really a typical project that Enernet Global developed exclusively for NPC Energy Solutions under the executed asset development agreement. And for 2022, we are very confident to sign further power purchase agreements and energy service agreements with blue chip companies in Puerto Rico as well. This is why this project as a demonstration project and for the business development, is also very key for our company. When we move to Slide #6, our project Planeta Rica in Colombia which is a 50-50 joint venture with the French IPP, Akuo Energy, overall, the construction process in this solar park event is very well. The main update during the last quarter is mostly that the Solar PV panels have now all arrived at the port of Cartagena, which effectively eliminates any remaining uncertainty with regards to shipping costs and panel prices entirely. So we are very pleased also that Suntec delivered those panels at the agreed prices from the date back from Q2 2021 compared to many other panel manufacturers that have in the meantime changed their initial pricing and increased by material amounts. If we go to Slide #7, we see our second project in Colombia was Girasoles, which is 100% owned by MPC Energy Solutions, and which is one of the projects that was entirely developed in-house in the group, and is part of the portfolio that MPC Capital previously contributed to the company prior to the IPO. Here, we can share that the EPC contract with Socolco was successfully closed. We have issued the notice to proceed for the start of construction, and the panel supply agreements with Trina Solar have signed, as well as for the inverters with Huawei successfully in the last weeks. Given the limited size of this project, we continue to build it on an all equity basis with assumed refinancing later on after COD. Moving over to Slide #8, Santa Rosa. Previously we showed this project name [indiscernible]. And I may have mentioned it before, but there was some confusion on the local communities with regards to a substation that had the same project name, so we decided to rename it to Santa Rosa and Villa Sol. The project has reached financial close prior to Christmas. We have signed a debt financing agreement with Banco Agricola that is a local subsidiary of Colombia. And we have also signed the EPC contracts with the Enernet Group. And here in this project we are using and will install panels from Canadian Solar on single access trackers. An update here as well. As you know, our PPA, our 20-year U.S. dollar PPA with the local subsidiary of A.S. Corporation as an off taker is packed to the industrial consumer tariffs in the country. And we see the strong uptick in LNG prices, and LNG is the price setting technology in El Salvador, which in turn creates a significant upside potential for our equity investment here. We see already in the current tariff crisis that they are about 20% higher than initially projected, and our business plan and financial model last year, and the local energy consultants also predict that this trend will continue over the next 5 to 7 years, creating here upside for this project that may materialize if these prices remain that high for us. The tariff is being updated and revised on market conditions, so to say, on a quarterly basis. And when the project will start operation in the last quarter of this year, we predict very attractive energy prices in the vicinity of USD 0.10 to USD 0.11 in El Salvador, to sell it. Planeta Rica, Los Girasoles and Santa Rosa, as you see, are all scheduled to start operations in the last quarter of 2022, meaning that a significant amount of our portfolio will be cashflow and revenue generating by the end of this year. Moving over to Slide #9. Our 2 lighthouse projects in the region, and transformational for the island and the people of St. Kitts, our hybrid project, which combines Solar PV and battery energy storage system. The St. Kitts project that we do together in a partnership with Leclanche, is a true demonstrator how renewable energy can really provide true baseload power to an island like St. Kitts. The acquisition was closed just prior to Christmas, and we are currently focusing on the finalization of the debt financing, the expected financial close in the second quarter of 2022. Overall, this is also the largest hybrid project in the Caribbean and Central America, and will effectively replace 30% of the diesel fuel gensets on the island, producing power around 30% cheaper than previously with the diesel-generated kilowatt hours. In addition, we will also provide spinning reserve capacities, which will further improve the grid stability on the islands. This is our first project with a Swiss-based technology and storage solutions provider Leclanche, but we believe that there are many islands in the region and beyond where this can be replicated, and further collaborations between Leclanche and MPCES are anticipated. MPC Energy Solutions has structured this as a combined equity and preferred investment, making this also financially a very compelling investment for the company. Moving to Slide 10, and last but not least, Los Santos Solar 1, our first project in Mexico, where we closed the transaction and the acquisition only recently. Here we just would like to highlight that this project really checks all our boxes fitting very well in our ITT strategy. We do have a large private corporate that produces locally high credit quality. We have a long term U.S. dollar power purchase agreement in place. We have a quality asset with strong operational track record. We have the option to extend this project materially and increase the capacity to optimize up to 90 megawatts in the near to medium term future. And with the DFC and the North American Development Bank, we do have 2 very strong new lenders who will be a long term partner in this project to MPC Energy Solutions as well. Mexico is one of the largest renewable energy markets in the region, and with Colombia, the 2 large volume markets really when you consider the Americas for MPC Energy Solutions. So we are very keen on closing additional projects in the country, given that energy remains also, for the private sector, a very viable alternative to the supply from the grid operators. So overall, our focus on 2022, just to give you a brief outlook on our operational side, remains to implement and to deliver our construction project on time and budget, and this will really allow us to grow our revenue base during the year of 2022. Furthermore, we will mature also our development pipeline in various countries that are currently undergoing, and we expect to successfully close a series of new power purchase agreements, to allow us to make final investment decisions and which financial close for some of these projects. Selectively, we will also acquire from third parties new projects that are ready to build or already operational, and we will use our existing partnerships with the developers such as Enernet Global, Soventix and Leclanche, to also further add new projects to our portfolio. And with that, my part will end today. Thank you very much. Stefan will continue with the presentation, starting with an update on Enernet Global. Stefan, over to you.

Thank you, Martin. Just a quick reminder for those joining us for the first time, or a brief introduction to Enernet Global. So Enernet Global -- and we should see the slide coming up shortly -- is a U.S. based micro grid development that has a pipeline of projects that they're developing and building all over the world, including Latin America and the Caribbean where we are currently active, but also South East Asia and Australia in markets that we as MPC Energy Solutions eye for our global expansion down the road. Enernet has a proven track record, and we entered a strategic partnership with them in 2020 already, and was intensified in 2021 and now in early 2022. And to date, we have provided funding for Enernet Global totaling USD 4 million. And the reason why we did this is that, part of the strategic partnership -- we achieved a couple of things. First of all, Enernet Global is really active in the market that shows rising demand for PPAs or corporate off takers. It is, as I already mentioned, the basis for our future global expansion, as they give us access to projects and markets that we're currently not developing in ourselves. And the agreement that we have with them, also in return for our investment and financial support, is that we do have exclusive access. We do have a right of first refusal on projects that they develop and build in Latin America and the Caribbean, and as I mentioned also in Southeast Asia and Australia. And the latest developments, which also allowed us to extend that agreement of exclusivity and right of first refusal by another year, and to include Australia earlier as originally anticipated starting this year, is that, Enernet Global issued a convertible note which was mostly backed by the existing shareholders including us, and also the Japanese company [ Haidu ]. And we also saw a few smaller shareholders contributing to that convertible note. So as MPC Energy Solutions, we provided another $1 million, which is included in the $4 million that I referred to earlier. And as a return, we received this extension of exclusivity and the addition of Australia sooner than anticipated. Meaning that, under the original ROFR and what we currently have, there's really a huge base of projects. And you will also see that in the overview that we will share on the next slide, that we will have access to, and that is ours to turn down. If we could move to the next slide, please, you will see what I mean. So as Martin has elaborated on each project individually, it is no surprise that, what we define as our portfolio -- so the projects that we own and that are soon operational -- has changed again from the last quarter. We now have the project included here that Martin mentioned, and I won't go into detail here because he's already elaborated on them. Suffice to say that this is the first set of projects that will become operational for us, that will deliver revenues and steady cash flows back to us, and that we will also focus on, to make sure that they become operational in the projected timeline. When we look at our backlog, and you know that we qualify this as an advanced backlog, meaning those projects that are next in line to become part of our portfolio, and our development backlog that we actively develop and still have certain milestones to achieve before they can really qualify as advanced and ultimately portfolio. We have made one change. From the very beginning, we always had our project in Honduras called Nacaome, as part of our advanced backlog. It's a 60 megawatt solar project that has been operational since 2018. And due to the recent political developments in Honduras, namely that there was a change in government, and that also Honduras has struggled a bit with raising funds in the capital markets, we have put this project on hold for the moment and move it back to our pipeline, because we do have very strict criteria when something should be considered an advanced backlog or development backlog and when not. And, while we have an understanding with the current owners of the projects and also with the banks involved that we will make a very good partner, and while all the contracts have been negotiated and are basically ready to sign, we are still waiting and seeing how that situation in Honduras develops, before we revisit our risk assessment and revisit the investment decision that was originally made. In terms of our development backlog, we also have made a few changes just in terms of understanding. So development backlog for us means projects that we have either underdeveloped ourselves or that we have an exclusive access to, or right of first refusal to, and that are highly probable to achieve ready to build over the next 18 -- 12, 18, 24 months. So this is why we will see updates to this backlog from quarter-to-quarter. We, of course, have a very high priority on the projects that are under our own development, namely in Colombia and Jamaica, which are also a substantial part of that development backlog, and then through our partnership with Soventix in the Dominican Republic and with Enernet in Puerto Rico, and now also Australia and the Philippines, as you can see here. There is a lot going on in the development side, and we have assigned adequate budget to it, to get all of these projects to ready-to-build, and we will push very hard to achieve the ready-to-build indicated time line that you see here on the right of the table, to make sure that these projects become ready-to-build if they are not already in 2022 and 2023, because we see substantial value creation from getting these projects to where they need to be. And for us, this is really, of course, also a core part of our business. If we move to the next slide, we want to give you an outlook on that portfolio. So we are now just speaking about the 6 projects that Martin has introduced today, and that are qualified as our portfolio. And if you just look at these 6 projects, and you just look at our own economic share in them, you will easily be able to make or have 2 key takeaways from it. First of all, these projects alone will lead to a significant generation of revenue of $18 million by 2024, when they are all fully operational for the whole year. They will deliver high EBITDA margins. Average is 78% for all of these portfolio projects. And we will see very steady and predictable cash flows coming back from these projects in this nature of dividends, of shareholder loan repayment and interest on shareholder loans. This does not exclude -- or include, sorry, refinancing that we can still do. That is a separate matter. This is just in the operational course of business of these projects, what they will bring back to us, and they will combine for a proportionate installed capacity of 80 megawatts and 175 gigawatt hours of energy produced and sold every year. Inside this portfolio, there are 2 projects, which are all equity financed at the moment, and we are actively seeking to refinance them through -- over the next 12 months, either at COD or a little bit earlier if possible. We recently were in the region, and we spoke to a lot of financial institutions and commercial banks, and we see that there's a large appetite for financing these projects, and very, very good condition, so that we have no problem to expect that this year and early next year is the right time to make sure that we can generate some more cash back from these projects by refinancing them actively. And as a final and second takeaway, because of the lean overhead that we have and the structure that we keep, and because we see that these projects are well and will be highly profitable in generating cash flows for us and also profits, I would be very surprised if by next year, we wouldn't be net income positive on a corporate basis already, meaning including the overhead that we spend for keeping our team intact and administrating the corporation. So much for the outlook, if we move to the next slide, we will also give you a quick update on the preliminary financials that we published this morning. Now the audit is currently underway, but we don't expect any changes to the numbers that we have published. 2021 was in line with what we previously communicated, because we had no operational assets. There are also no revenues that we generated in 2021. This has now changed with the acquisition of Los Santos 1, that Martin mentioned, in Mexico. We are now officially revenue-generating, and with the asset in Puerto Rico that Enernet Global will hand over to us shortly, we will have a second asset under operation so that we should now see steady revenues coming in. For this year, we expect around USD 5 million already from these 2 projects alone. We ramped up the team, as you can see, from 2 to 16 people, and this is also reflected in the increase in personnel expenses, of course, in 2021, and other operating expenses were still heavily impacted by the IPO-related advisory fees that we paid, so that overall, looking into the future, other operating expenses and personnel expenses combined, should be lower than what we have seen in 2021, given that there were some extra effects here. The cash flow is very much mirror what we have done in 2021, with the operational cash flow being negative, and also the investing cash flows, giving our first capital employment -- yes, reflect our progress here. Next slide, please. On the balance sheet, there are still no real surprises in line with what we communicated. Of course, the non-current assets increased, giving our first capital deployment in Colombia and El Salvador and other countries. Since the end of the year, meaning since now in January and February of 2022, we have deployed another $19.5 million into projects in Colombia, in El Salvador, also, the partial purchase price for the Los Santos project in Mexico. And of course, we've also funded some of our SPVs that are currently handling developments in Colombia. And the total consolidated cash position at the end of last year was $56.8 million. Part of that was, of course, already invested in the project, companies, and with the additional investments that we have made since -- at the moment, on a holding level, free cash available to deploy into future projects and to pay for overhead is around USD 24 million. We still have no long-term debt, and are well capitalized for what is to come in from the plans that we have this year and next year. Next slide, please. Just to sum this up before we move into the Q&A, a quick reminder on our key financial calendar dates this year. We published the preliminary financials, the unaudited ones today. We will have the full annual report and our first Sustainability and ESG Report published in the middle of April on the 20. On the 28th, we will already give the regular update for the first quarter of this year, and this is also the first time that we will show the revenues from our first operational assets. Our Annual General Meeting will be at the end of June, and then we will continue to have quarterly updates, as in the past, in August and November, respectively, to reflect on Q2 and Q3. And with that, I want to thank you for listening and hand back over to Heike for our Q&A session. Thank you very much.

Okay. Thank you very much, Martin and Stefan. We will now continue with our Q&A session. [Operator Instructions] Let me first start by asking our operator on the phone line if there are any questions that came in by the phone line?

I'm not showing any questions through the phone line.

Okay. Fine. Then, let me continue with the questions via the webcast. We have one question that came in from Magnus Solheim. And the question is, can you give some more details to the 2024 guidance? Is this including the portfolio and advanced backlog where you have financing secured?

I would take this one. So this is only including, Magnus, the portfolio projects that we have shown on one of our slides and that Martin elaborated on today. And yes, financing is secured for these projects. PPAs are secured for these projects, and construction is either underway or finished, or almost finished in the case of Puerto Rico, for example. So we believe that this is a fairly solid prediction on our proportionate share in these projects.

Okay. The next question that came in is from [ Anders Rosenlund. ] The question is, total committed spend that -- he's referring to Slide #12 -- of USD 56 million, how much was paid in as of the 31st of December last year? And how much is paid in as of now?

So if I understand the question correctly -- so the number that we referred to in terms of total investment, that refers to -- could you go to the slide? Because I think it says -- so that I can see it, sorry. So since the IPO last year, the roughly $45 million that we invested, that includes the numbers that we have shared with you on that slide that we did in January and February. That answers the question, if I understood that correctly.

All right. Then we have another question that came in from Magnus Solheim. Can you comment on the price changes for ready-to-build projects? Have prices changed significantly last year?

Yes, let me dive into that. Ready-to-build projects from -- as we see in the region where we are active, have not materially change the pricing when it comes to acquisitions, because the additional costs to build the projects had to be balanced. So there was no, let's say, additional premium for developers or sellers possible. As we all know, on average, total capital expenditures or investments for solar assets grew about 10% to 15% last year, which is primarily driven by the steep increase of panel prices, as well as of the transportation costs. So when it comes to what we maybe see in the European markets, that ready-to-build projects were traded at a higher premium, that did not occur in the markets that we are active in, for the mentioned reasons.

All right. The next question is from Marcus Soham. Can you comment on the St. Kitts project? Do you see potential for other similar projects in your target region?

Clearly, yes. First of all, Leclanche is working very actively in the region for those hybrid projects. What is most important for us is that, we are now building a first demonstration project, so to say, with St. Kitts, because, if you think about the sophistication of the public sector in the region, they, of course, want to see the real proof, that the combination of solar and battery can really deliver what these concepts are promising. And as I said, it's the first of its kind in such a large-scale hybrid project in the region. So there are various projects in the making from Colombia over to Jamaica over to Cayman and Bahamas and some of the other islands. But what we believe is most critical -- really once this project starts to be operational so that public sector representatives, such as Minister of Energy can come and see the track record of this project. Overall, of course, especially the Caribbean islands, which are in itself microgrids, so to say -- I mean, St. Kitts has a population of about 50,000 people, which is a medium-sized town in Europe maybe -- are perfectly suited for these sort of hybrid projects with the abundance of solar resource, as well as the demand and load curve from the local population. So if you can add these 3 or 4 hours of batteries, you can really meet the peak demand, which is usually in the early evening hours. So yes, we are very comfortable that there will be additional hybrid projects in the region. But you also have to think about the Philippines, for instance, which is nothing else than a combination of more than 1,000 islands, right? So at the end, 1,000 micro grids with no interconnection with remote areas. So these sort of hybrid projects combining 2 or 3 different technologies are, from our perspective, a key driver for the energy transition in emerging markets, which is a bit different than if you would look at the U.S. or Europe, for instance, at these sort of projects.

Okay. The next question from [ Anders Rosenlund ] is why are tax payments for the Santa Rosa and the Villa Sol project so significant?

Can we go to the project slide, please? So that everyone -- where do we have -- the total paid taxes is $15.3 million. Yes, primarily, this is, of course, driven by the amount of corporate tax that is payable on local country level as well as recording taxes for distribution out of the region. There, we are subject to the local regime. However, I have to say that, especially in El Salvador, we are actually enjoying a 10-year tax break. So the initial 10 years, we will not pay corporate taxes in El Salvador due to the, yes, regulatory incentives to build these assets. So these $15 million in taxes are really back-ended and not front-ended taxes.

Maybe I'll take the next question from [ Anders Rosenlund. ] What is the debt funding cost on the different projects?

Yes, we can maybe go project by project. And Stefan, if you want to take it, feel free.

Yes, of course. So going through the portfolio in Puerto Rico for projects like the Neol CHP, we see very attractive terms. We, of course, will seek to refinance it, but the original construction loan was priced at around 5%, which, of course, is quite attractive. If we move to the project in Colombia that includes Planeta Rica and Los Girasoles, what we see is that, there's usually a premium of 3.5% to 4% on the interbank rate in Colombia, which is currently at around 4% as well. So you will find projects that you can easily finance for 7.5% to 8% in local currency. Santa Rosa, we have sold -- is quite similar. What you will have there is a lower base rate that they refer to, which is usually the LIBOR, and then they add a premium of around 500 basis points or 5 percentage points on that. And in St. Kitts, it is fairly similar. We're talking about local currency rates of around 5% to 6.5%, depending on where you are. We are at the lower end for this project. So overall, cost of debt for the projects that we have are significantly below the equity hurdle rates and IRRs that we have. Because as I mentioned earlier and referred to earlier, the mandates that the local banks have, backed by sometimes development banks and institutions, financial institutions also supported by the local government, is extremely attractive, because the countries see the need to very rapidly transit to a renewable base or a diversify the renewable base in their country, and this is reflected in the way that they're structuring the regulatory frameworks and the financing support.

Okay. The next question is from Magna Solheim. Given that the project portfolio has changed slightly, can you give some additional details on when you expect the remaining cash to be fully deployed?

Yes. So on that basis, we expect to make some final investment decisions in the second quarter of 2022. With then depending on for which projects we are deciding, either on operational or ready-to-build projects, that the capital will then deploy it, respectively. But it will certainly be bindingly allocated to a project in the second quarter.

Okay. The next question is from [indiscernible] and he's asking, what do you think about convertibles to finance some projects in the future, perhaps via MPC Capital or other investors?

Stefan, do you want to share your view on this?

Sure. I mean, as I elaborated previously, so there are resources that we can use internally to free up additional cash for deployment. So that is maybe a statement that has been lost in the past that, because of the inherent value of our development pipeline, because some of the projects are still all equity, there is cash that we can free up and reinvest before we entertain any external funding on a corporate level. And should that happen, we are open to the options out there. Of course, we are constantly evaluating with our advisers and also with our Supervisory Board, and Martin and myself in intensive discussions of what the best way of future funding would be. And convertibles are not off the table, but they are also not actively on the table, because at the moment, that question is being discussed, but on a level where we haven't narrowed down on any individual option. Martin, would you like to add anything to that?

Nothing to add from my side.

All right. Then let me move on to the next question. It came in from Daniel Stenslet. And his question is, you lowered your IRR guidance a couple of quarters back. Is that revised guidance still representative, also taking into consideration that the Honduras project has now been replaced?

Yes. The IRR guidance was changed in the perspective of the market segment, right? So we had to adjust returns to reflect the cost of sourcing major equipment, like the panels and also the transportation costs, that was, to some extent, be offset by savings, for instance, and also by a higher inflation environment, keeping in mind that a lot of our PPAs are also inflation linked. So the projects will, to a large extent, recover some of these return losses, giving that the PPA, the power purchase prices that the off-takers are paying, are likely to increase steeper than was initially projected. But we have seen that shipping costs have flattened out on a very high level, that panel prices are not further increasing. In particular, even in the first quarter of this year, there was even a slight drop from a very high pricing level at the solar panel prices. So we don't have to revisit any IRRs at the moment. We also don't see that the markets have the same amount of risk and uncertainty that it had in 2021. Of course, no one can also predict what final impact the current geopolitical situation will have on supply chains, again, in the situation of Ukraine and Russia, giving material new disruptions also in the shipping industry that we see. But from a solar perspective, at least, most of the equipment is coming from China. So we don't believe that, that will impact our business in Latin America really. So yes, we don't see any need to further revisit our return plan.

All right. Then another question that came in is from Robert Barnard. And his question is: Your share price is very low. What impacted this half on your business plan? How do you aim to turn this negative share price development around?

Yes, of course, for a very young company that has only recently been listed, and just to say a small scope of activities, the very short term oriented capital markets, are of course, a challenge in the context of our very long-term business compared to other companies that maybe have lifted outside the infrastructure sector. So on the business plan, if you look at the projects, there is, at the moment, no impact at all, as we have outlined an initial project pipeline that we are executing with the capital that was raised during the IPO. Of course, as a management, and speaking also on behalf of the Supervisory Board, we are not happy that the market is currently not valuing the company at a level that we feel is appropriate. We are, I think, at the moment, trading around 15% below our cash position, which is, yes, of course, a huge under evaluation of the value of the company. So what can we do is, I think we have to focus on those matters that we can influence. We cannot influence the current uncertainty and volatility of the capital markets. Overall, the sentiment that was coming also with the valuation around ESG-driven companies or renewable energy IPPs that certainly peaked overall -- So what we are focusing on is really on the execution and delivering on our own projects and our own equity story, and believe that, at one point, this irrational pricing of our stock will disappear, and we will have a true value pricing with regards to, yes, our company value. So Stefan, do you want to share any particular insights on that as well?

Yes. Absolutely. So just in addition to that, I mean, what can we do to make investors more comfortable with our company, and our focus on emerging markets and our stock. First of all, what we do here today and what we've been doing on a quarterly basis, at least over the past few months, is, to be very transparent and straightforward on our plans and on what we see develop, and to make sure that everybody understands that we have delivered what we say that we would do. Given the challenges with COVID and supply chains, we have seen delays with everyone else in the industry, but we have not abandoned any projects because of that. And we have made progress. We've seen the selective achievements that Martin has shared on the first slide of the presentation. So I think in terms of the fundamentals of our company and where we're going, everything is intact. What more can we do? We can continue to execute, as Martin said, make sure that these cash flows that we are predicting come in, because these loans on top of the free cash that we have justify significantly higher valuation. And if you then consider the development backlog that we have, which is, of course, more difficult to share the value of, and the inherent value that it has, we will have to find ways to also communicate to the market what these projects are actually worth, and that will be easier as they progress and achieve ready-to-build status and move towards ready-to-build status, and we will work very hard on doing just that. But what we also cannot, of course, control as Martin said, is the overall market sentiment for these stocks, and also the low liquidity that we see in our share, which, of course, is good, meaning that, we have key anchor investors who believe in the story, who are with us long-term, and who're not selling their shares, which is good on the one hand. On the other hand, of course, it also makes it more difficult for other larger buyers to come in. And we will address all of that. And as Martin said, we will just continue to execute and deliver and prove that we are here for a reason.

Thank you, Stefan. So as far as I can see, there are no further questions coming in via the web chat. If there are no further questions on the phone line either, then this concludes the Q&A session and the webcast. If there are any further questions that we have not covered today, please feel free to contact us directly. You can either send them to us via e-mail at [email protected], or of course, you can approach any of the team members you may already know directly. We'd like to thank everyone for joining us. Sorry, hang on there. Not to be too quick. There is one further question that came in from Anders Rosenlund, and that relates to corporate governance. Could you give us a short overview of the MPC Capital-MPC Energy Solutions relationship, and link MPC Capital as a founding shareholder as represented in the Board and support the company? Are there any other related transactions or commitments? And is management in MPC Energy Solutions solely employed by MPC Energy Solutions?

Yes. I can take that question. Of course, on the corporate governance, actually, nothing has changed since the IPO. As you rightly point out, MPC Capital is the sponsor and the largest single shareholder in the company with 20% of shareholding. No shares has been traded since the IPO. From the IPO materials, you may recall that MPC Capital and MPC Energy Solutions agreed on a certain amount of services to be provided, that is primarily on the corporate support functions, that is also on certain asset management capabilities that are being shared here with the group, and other synergies like IT, marketing, HR functions, that are being covered under those agreements, which makes it easier for MPC Energy Solutions as a company, in the beginning. In exchange, also, as you recall, the MPC Capital has agreed on a ROFR agreement with the company. So for a period of 3 years after the IPO, MPC Capital is obliged to present any suitable renewable energy projects in the market that it's sourced here exclusively to MPC Energy Solutions. So this is a very strong link, of course, between the companies. Key for us here is to address, of course, then, the conflict of interest. And therefore, we wanted to make sure that this is well documented between the 2 companies when it comes to origination and sourcing of new projects, and where these new projects are actually being allocated. So there MPC Energy Solutions is in a very preferred seat here at -- within the MPC Capital Group, so to say. Yes, as you know, Ulf Hollander is the CEO of MPC Capital, and he's the Chairman of the Supervisory Board. This is the case here for MPC Energy Solutions, as you know, also for MPC Container Ships, another company that is sponsored by MPC at the Oslo Stock Exchange. Then we've my position here as the CEO since last year, also in a very similar setup, as we have successfully managed the MPC containerships. In the last year, the vast majority of our work is, of course, for MPC Energy Solutions, and my contract is with MPC Energy Solutions. And for Stefan Meichsner, the contract is for MPC Energy Solutions solely in Amsterdam office.

All right. Thank you, Martin. Then I think we are done with all the questions today. So thank you, everybody, for joining us. And we wish you a great rest of the day.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.