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

Yes. Good morning, everybody. Welcome to the Annual General Meeting of MPC Energy Solutions N.V. I would like to welcome all shareholders, my fellow Board members on the Supervisory Board as well as the Management Board to this Annual General Meeting. This meeting will be held both physically in our premises in Amsterdam as well as virtually to accommodate those shareholders that are not able to attend the AGM physically. Before I address the agenda items, I would like to address a few formalities. First of all, I would like to note that Ms. Heike Hulle was appointed Secretary for this AGM and is being asked to take the minutes of this meeting. The meeting will be conducted in English. The votes were already cast by proxy prior to the AGM, and the results will be formally announced during this AGM. All shareholders that were registered as such on or before March 21 were invited to this AGM and were able to cast their votes by proxy. The AGM will be streamed as well as a live event and the recording will be made available on the company's website right after the meeting. All shareholders were asked to render their questions prior to this Annual General Meeting, but you will also be allowed during the meeting to ask any additional questions, of course. To ask questions during the meeting, please refer to the chat function in the MS Teams live stream or directly address the management board at the physical event. With that, I would like to turn over to Stefan Meichsner, our CFO, and ask him to present the report of the management.

Thank you, Mr. Chairman. A warm welcome to our shareholders and other members of the Supervisory Board. Before I share my thoughts on financial year 2023 and provide an outlook for 2024, I would like to mention that certain statements I'm about to make are forward-looking statements. I make these statements on the basis of my views and assumptions regarding future events and business performance, and I do not undertake any obligation to update these information and statements in the future. Forward-looking statements are subject to risks and uncertainties, and actual results may differ materially from the results expressed or implied in light of a variety of factors. 2023 was a transitional year for MPC Energy Solutions, a transitional year marked by significant milestones for our young company. During the year, we connected 4 power plants to the power grids in El Salvador, Colombia, and Puerto Rico, thereby significantly increasing our installed capacity to nearly 80 megawatts throughout Central America and the Caribbean. In addition, we signed a long-term power purchase agreement with one of the largest privately owned companies in Guatemala and construction of the 65 megawatt peak power plant to support this agreement has already started, and the plant is expected to commence operations in mid-2025. Our company also began new greenfield developments across the region as we shifted our strategic focus and put greater emphasis on developing projects from scratch and teaming up with co-investors once power plants reach the ready-to-build stage. Overall, we saw a significant increase in revenues and operating profits, and we successfully divested projects that no longer met our strict investment criteria, underlining our focus and determination to creating shareholder value and securing adequate risk-adjusted returns. In 2023, MPC Energy Solutions recorded consolidated revenues of USD 9.1 million. And despite negative impact suffered from energy trading losses in a challenging Colombian market, we were also able to reduce our operating losses year-on-year. Onetime impairment charges and other factors led to an overall consolidated net loss of $8.5 million or $0.38 per share. Meanwhile, our company remains well financed and well capitalized. We still have a relatively low leverage ratio compared to our peers and our cash reserves enable us to finance operations and project activities in 2024, 2025, and potentially beyond without being required to raise additional equity or debt capital. Looking ahead, 2024 will reveal the true potential of our existing portfolio. For the first time, all 5 power plants in our portfolio will see a full operational year. In addition, the energy trading losses that weighed down our 2023 results are now contained, and we also concluded relevant restructuring measures in our Mexican power plant, which will increase the project's output, revenue, and profit margin. The overhead cost-cutting measures we announced and began to implement in late 2023 are already becoming visible as well. And on top of that, we are currently building our largest project to date in Guatemala, which once it is completed, will nearly double our installed capacity. The investment in Guatemala is clearly, very clearly going to be transformational for MPC Energy Solutions. Consequently, for 2024, we expect a significant increase in energy output in revenues and operating profits. And we would also consider it a surprise if we would not show a consolidated operating profit on corporate level this year as well. To demonstrate our progress, we will update you, dear shareholders, on the 30th of April during our regular quarterly webcast. And with that, Mr. Chairman, this concludes my prepared remarks. Thank you for the opportunity to create a solid foundation for MPC Energy Solutions and also for allowing me to lead our company into a promising future. Mr. Chairman, back to you.

Thank you very much. And I would like to take this opportunity to thank the management for their tremendous efforts in 2023. It's not been an easy year by any means, certainly not in the global space and not in the renewable space. And we are happy to report where we are. It's been quite a journey, not without challenges. But as the CFO reported, we are on a very good track and to a promising future with the portfolio that we have. With that, I would like to turn to agenda point #3. In case there are any questions remaining from the shareholders. There are no additional questions. I note. So thank you very much for your elaborations, Stefan. With that, we can turn to the voting results. A total of 5,120,795 votes were exercised, representing 23% of the share capital. And I do accept all of these votes, and I would like to present the voting results. Resolution #1 deals with the Adoption of the Financial Statements for 2023. And I would like to propose that the annual report and the consolidated financial statements for 2023 be approved. They were published on April 2 of this year. The company generated revenues of USD 9.1 million in the financial year, and the net loss for the year was USD 8.5 million. Total assets of the company amounted to USD 123.1 million. The auditor, Ernst & Young Nederland LLP, has issued an unqualified opinion for the annual report and the financial statements 2023. The result is that, that all votes approved the results or 100% no votes against and no abstentions, so the resolution is passed. Resolution #2, I would like to propose that the Management Board is discharged for the financial year 2023. Martin Vogt, our previous Chief Executive Officer; and Stefan Meichsner, the Chief Financial Officer of the company, were the only members of the Management Board during the financial year 2023. Martin Vogt's contract ended on December of last year. Again, we have 100% of the votes. 5,120,795 in favor of discharging the management Board. Resolution #3 deals with the discharging of the Supervisory Board for the financial year 2023. And again, I would like to propose that the discharge of liabilities be granted to all members of the Supervisory Board. That does include Dr. John Benjamin Schroeder, Mr. Kjell Roland, Mrs. Kathryn Baker and Mrs. Ellen Hanetho as well as myself. And we were the only members of the Supervisory Board in 2023. And again, we have 100% of the votes in favor of discharging the members of the Supervisory Board. We would like to thank all shareholders for their votes. Resolution #4, deals with the appointment of the auditor for the current year, the financial year 2024. And again, we would like to propose that Ernst & Young Nederland LLP, in Zwolle, is re-elected as our auditor for this financial year. They've been the auditor for the financial years 2020 through 2023. They are very familiar with quite a complex setup in terms of the corporate structure, the financial history and the plans. The Company and Ernst & Young will agree on a competitive fee structure for auditing the company's annual report as well as the consolidated financial statements for the financial year 2024. Again, the resolution is passed with all votes in favor of the appointment of Ernst & Young, representing 5,120,795 votes. Resolution #5, the appointment of Fernando Zuñiga to the Management Board as a Managing Director. Unfortunately, the resolution was not added to the official agenda published in the Dutch papers on time. And therefore, in accordance with Dutch law, the voting results on this resolution, the result is void. The resolution is not passed, the resolution will be added to the agenda of the next annual general meeting, which will be convened in due course. Resolution #6, the extension of the term of the Supervisory Board members reappointment. I would like to propose that the term of the members of the Supervisory Board is being renewed for an additional 4 years. We have 3 categories of members of the Supervisory Board. I'm the Supervisory Board Director C; Dr. John Benjamin Schroeder appointed as a Supervisory Board Director B; and Mr. Kjell Roland, as well as Ms. Kathryn Baker; and Ms. Ellen Hanetho, are our Supervisory Directors A. All, we are all jointly referred to as Supervisory Directors, and we were the only members of the Supervisory Board during the financial year 2023. Our current term ends with the AGM next year, but it is proposed to already address the reappointment of all members of the Supervisory Board at this AGM. All Supervisory Board members are eligible and available for an additional 4-year reappointment. The Supervisory Board is submitting a nomination for the reappointment of the proposed Supervisory Directors, A, meaning, Kathryn Baker, Ellen Hanetho, Kjell Roland; and the proposed Supervisory Director C, Ulf Holländer, myself. The nomination for the reappointment of the proposed Supervisory Directors A and C is based on the outstanding way they have performed their role as members of the Supervisory Board, again in turbulent and dynamic times. The industry knowledge, experience as well as the understanding of the challenges of our industry is met with great value for MPC Energy Solutions. The proposed Supervisory Director B, Dr. John Benjamin Schroeder is appointed by MPC Capital Beteiligungs-gesellschaft mbH, in accordance with the articles of association of MPC Energy Solutions N.V. The appointment of the proposed Supervisory Director B is therefore not part of the General Meeting of MPC Energy Solutions. I would like to propose to extend the term of the proposed Supervisory Directors A and C by 4 years and thus reappoint such Supervisory Directors effective as of the date of the ending of their current term with a new term ending after the AGM meeting in 2029. The votes cast represents votes in favor of 4,605,795 and votes against 515,000. Therefore, the resolution is passed with the majority of 89.9%. I would like to take this opportunity to thank my colleagues on the Supervisory Board and congratulate them to the reappointment for the upcoming years. With that, I would like to turn to agenda item #5. Any other business. I point -- I would like to point out that there are no additional matters that we need to attend to today. Therefore, I would like to close this meeting. I would like to thank the management and the team for preparing for this meeting to take this opportunity to wish the management good luck with their efforts and endeavors in the current year and also like to thank the team for being with us bearing with us in turbulent times, and I'm sure there are more promising times ahead of us. And with that, I would like to thank all participants, our shareholders, management, and other interested parties and conclude the meeting at 20 minutes past 10 European Time. Thank you very much and hope hoping to see you at the next opportunity. Bye-bye.