Photon Energy N.V. (PEN) Earnings Call Transcript & Summary

Good morning. Welcome to Photon Energy's presentation of quarter 3 2021 results. My name is Georg, I'm the CEO; and here together with Clemens Wohlmuth, our CFO.

Good morning.

And we will run you through brief introduction of our company. Most of you are probably well aware of our activities, and then we'll -- Clemens will run you through the Q3 results and we'll also discuss some of the highlights during Q3 and the outlook for the next couple of quarters. So we'll start with a quick recap of our business model, go through strategy and outlook and in the financials. So the company has set been up in 2008. We're a Dutch company. We are publicly listed with our shares traded on the regulated markets of the Warsaw and Prague Stock Exchange. And we are 140 employees, we're mainly active in Central Europe and Australia. Earlier this year, we obtained a sustainability rating from imug, is a German rating, rating agency. And we have 2 business lines, which is solar, that's the business we've been in since the very beginning; and our water business line, which we established and started in 2017. We currently have a portfolio of 90 megawatts. And year-to-date, we have generated 92 gigawatt hours and are on track to deliver over 100 gigawatt hours to liquid. Our business model, in a nutshell, we are downstream integrated, which means we don't manufacture any of the components needed for PV plant However, we cover the whole life cycle of value chain of the PV project and turn those projects into our plants and upgrade those. So project development is at the beginning of the process. It's absolutely key for our strategy to develop projects, which we do in-house, but also in cooperation with other developers. And the goal is to turn them into power plants and add into our proprietary portfolio. Our EPC solutions is delivering -- is providing those services in-house. So their task is turning them -- those projects into power plants, but we also offer EPC solutions to external customers where -- however, our goal is not to be the biggest EPC in the markets where we operate, but we're trying to leverage our know-how, particularly in the area of hybrid solutions into projects where we can generate adequate margins on our external business. What is also very important is that our EPC solutions division is heavily involved in the project development. So we -- just to so to make sure that all the permitting is done in such a way that those power plants can be built seamlessly using the technology standards and the layouts that we need. And here, just to point out at the moment, we are developing all power plants on single-axis tracking as single-axis tracking power plants provide a much more stable and better output and also a better production profile in the market environment as we're producing more electricity in the morning and the evening when prices are the highest. Another important element is procurement. So we have our own Photon Energy Technology division, which procures components, that's modules and inverters, increasing the also batteries, but also mounting structures for our EPC Solutions division But on the back of that, we also distribute those components to the external customers, which are typically small installation companies, other EPCs and sometimes developers who decide to the power plants themselves. And given the current supply chain issues around the various component types, this is actually very important because for manufacturers of modules, inverters and the other components. We are not only a project developer who procures stochastically, but we also have flow with business through our distribution business. So we are ongoing long-term customers, and therefore, in this challenging environment, we see big a advantage as we are definitely on the top of their priorities. The goal and the backbone of our activities is to increase our investment portfolio. A little bit later, we will -- I will talk about our goals. So we want to take -- grow our portfolio from the 89 megawatts to 600 megawatts by the end of 2024. And as you'll be able to see from our project development pipeline, we're well underway to develop the corresponding number of projects to fulfill that goal. Our investment approach is that we like owning those power plants forever. So there's an investment horizon we only put in our portfolio projects that we have developed or codeveloped ourselves and did ourselves. So we have control of the quality. But -- and we don't sell those as some of our peers do. At the same time, we are not increasing our portfolio by acquiring operating assets from others. The grid connection of the power plant is always the first step in a very long process, given that the target life of a PV plant is 25 to 30 years and probably a little beyond, and then that's where operational maintenance becomes very important. This is an area we have been taking very seriously from the very beginning. We take care of our own power plants and also a growing number of external customers. We have our own monitoring software. We have our own control room in the markets where we operate. We have our own well-trained technicians. And the goal, of course, is to maximize the uptime for our power plants. We cannot influence the weather, but what we can influence very well is maximum availability of the power plants that we take care of, and that's both our own and those of our customers. Here, it's very important to point out that the preventive approach is key to achieving this goal. Just a few words on our water services, which we have been active in for the last 4 years. We have basically 4 areas, which is water treatment in the drinking water equipment, wells and resources in those areas, water utilities, our primary customer base. And the third area is water resource management, which focuses on surface waters, lakes, ponds. And here, the 2 types service water areas that surface -- drinking water resources, but also water bodies that are primarily used for the recreation purposes. And a specific area of focus here is fighting blue-green algae blue, which has, during the summer months, become a major topic pretty much worldwide. So we start in Central Europe, but now we recently also signed our first contract in Australia. Last but not least, is groundwater remediation where we have a patent pending nanoremediation technology, where we use nano and micro particles of [ iron ] industry active agents to break down pollutants to groundwater. Our approach is in-situ, which means that we don't need to pump the water or remove soil, but the cleaning happens underground. We also use DC current to further enhance the reactivity of the iron. We have had several projects, but one specific area that we would like to point out, it's very important to us, is that based on several hundred directed tests, we have found out that our technology can break down PFAS chemicals, P-F-A-S. These are chemicals that are widely used in products that are water and oil resistant, but also in higher fracking forms because they are also higher retardants. Unfortunately, time has shown that these chemicals in very, very small quantities by accumulating animals and human tissue and have negative long-term health effects. We are currently in the process of commencing a pilot project with the Australian Department of Defense, Australia being a country that was the first to strongly regulate PFAS chemicals. North America, it's also a potential market for this and slowly also in Europe, regulators are waking up to this problem area. We expect results from our payers in Australia in the first half of next year. And then we hope to proceed in the location with the Department of Defense on cleaning up the entire site. So this is a very exciting area for us. And of course, we'll keep investors informed about the progress. Our presence is mainly Europe and Australia. And Europe -- the strong focus is on the 4 Visegrád countries, Poland, Czech Republic, Slovakia and Hungary, plus Romania and then, of course, the Australian market, where we've been active since 2012. Our current project pipeline, and more details on that a little bit later, it's just short of 900 megawatts. Our electricity power plant portfolio stands at 89.3, of which 15 are in the Czech Republic, 10.5 in Slovakia. These are power plants that were built 10, 11 years ago. Over the last couple of years, we added 49 megawatts in Hungary. And earlier this year, specifically in August, we commissioned 2 power plants with a total of 14.6 megawatts, taking the total to 14.7 in Australia. And in operational maintenance, we are taking care of in total 330 megawatts, which, of course, includes the 89.3 in our portfolio and external customers. And we're also providing specialized services to certain PV in the brands across Europe, pretty much most of the continental European countries. So on the strategy and outlook, so -- Our goal are to significantly increase the deployment of projects into our own portfolio. So this is why project development has continuously receiving a lot of attention and also resources. And the goal there is to operate those -- own and operate those power plants and generate stable predictable cash flows from electricity generation. And in the current environment in Central Europe, or, in fact, across Europe, energy prices have gone up dramatically. We believe that our strategy to go merchant means to sell electricity into the market and actively manage those revenues by signing shorter medium-term PPAs or using hedging instruments is the right approach. This is what we've done in Australia with the 2 power plants that we commissioned in August, where we are selling into the market, both electricity and the green certificates that we are set to receive until 2030. And we believe that this is the right way to maximize the returns of our power plants and also in this context, what we do see both across Australia, but also Europe that the corporate sector is now very strongly moving towards procuring greener electricity, and we believe that prices or the green electricity will actually be receiving even premium prices over the market prices. In EPC division, we are -- on top of the increased activity from our on expansion of our portfolio, we see a lot of opportunities, particularly in the -- behind the medium sector. So we also see a lot of corporates, which are our target group keen to install PV systems on site -- for on-site consumption. So these are factories, warehouses and similar situations. It's mostly rooftops. But in some cases, also ground mounted power plants. So this is going to be a significant driver for our external EPC business in the next couple of quarters and years, and this is also an area where we will be deploying our own capital. So we see a certain subset of those corporate customers interested in solutions that are off balance sheet from that point of view. So that will be based on some of the natural PPAs or similar arrangements. This will also drive our O&M business, which is the second part of our business was very predictable, stable revenues. It's, in essence, very similar to facility management in real estate. So the numbers are much smaller than on the energy generation side. However, this is a very, very stable business with very well predictable revenues and cash flows. And last but not least, the strong increase in demand for components will also lead to material growth in our technology business. We are trying to launch a B2B web platform shortly to increase our capacity to meet that growing demand and of course, also our procurement strategy. It's developed in such a that we can meet that demand in the next quarters and years. On. Our water business, clearly, we want to grow across all the 4 activities that I outlined before. But the one area where we expect very significant growth potential to the point where our water business could become a very strong pin of our future business and growth is the PFAS nanoremediation, where as I mentioned before, we expect the outcome of our pilot project with the Australian Department of Defense. And on the back of that, we see a lot of additional growth potential. Coming back to project development as this is a key factor, a key driver for our growth. Basically, our premises that control of our own proprietary pipeline gives us control about everything else. At the moment, there is truly very, very significant demand for ready-to-build projects across all the markets where we operate. At the moment, we have a pipeline of over [ 217 ] megawatts in Romania. So this will also be our most active market in terms of increasing our portfolio next year. We're also developing [indiscernible] in Poland, where we are fully developing in-house. So there's no co-development there. In Romania and in Hungary, there some of the projects that are co-developed, but in Poland it's fully in-house and every -- build a very significant organization that is going out and looking for locations and going through the permitting process. And we expect that portfolio to be growing incrementally every month. And in Hungary, we've currently 2 power plants under construction and also expect those -- some of those projects to be -- become ready to build next year and therefore, to be a contributor to our portfolio growth next year. In Australia, there has been, over the last 12 months, some significant changes. So if you look at the number, we had nearly 600 megawatts at the end of last year. That number came down as a result of, in essence, what we did with Canadian Solar, our development part in Australia, where we decided to swap our respective shareholders in 3 projects and we ended up with a 65% stake in Maryvale, which is a 160-megawatt project, which of the 3 was actually the furthest developed as it already have received development approval. In March, you can still see the 2 power plants was 14.6, that ended up in our portfolio. So they have been commissioned in the meantime. And we are currently evaluating all options, including potential disposal with respect to that Maryvale project because we see the future in Australia in integrating generation from solar energy combined with significant storage. And this is where our latest addition to the portfolio comes in. It's a 300-megawatt project in South Australia, which is based on the technology of a company called RayGen, in which we invested for the first time in April 2020. And we also participated in a recently closed capital round where AGL, the largest utility in Australia, Chevron and Schlumberger. So investors from the oil sector is also Equinor, a Norwegian fund investor alongside other investors. And this -- RayGen has managed to do is to combine concentrated solar with photovoltaic. So if you look at the picture, this PV ultra system consists of a mirror field, as you can find with many other CSP applications, concentrated solar applications, where sunlight is concentrated into a receiver. And while normally, only the heat gets captured, RayGen has developed a photovoltaic cell that can be placed in that receiver that can withstand the high temperatures and directly turns that concentrated sunlight into electricity through photonic. But at the same time, the heat still gets captured. So that concentrated sunlight gets used twice and that captured heat gets transferred into a high ventilated hot water pool, which keeps the water temperatures between 90% and 95%. The regenerated electricity is used to chiller water in second same-sized hot ventilated tank to treat chill to about 5 degrees Celsius. And when energy needs to be generated and supplied to the grid or a specific offtake through an Organic Rankine Cycle engine, energy is generated. This system can run as an island. It means not connected to the grid supplying a community or a remote mine, for example. At the same time, when connected to the grid beyond the supply electricity, you can also provide in areas and ancillary services to the grid. That project in South Australia for which we secured 1,200 hectares is planned to include 300 mirror fields. So each is 1 megawatt of electric and 2 megawatts of heat production, so 300 fields in megawatts. Currently, we are looking at a grid connection of 150 megawatts AC, most likely to an existing substation, and a storage capacity of 3.6 gigawatt hours, which at this point in time would be the largest energy storage plant in the world. Excluding Pumped Hydro, the currently largest is in Morocco is 3 gigawatt hours. By the time we build this, it may not be the largest anymore, but it is clearly of very, very significant size. And we're also currently looking at several additional sites across Australia with a particular focus on New South Wales. And so this system will be able to provide the full load of 150 megawatts for 24 hours. So what this technology can do, it's a very clean alternative to batteries as only water is used as the storage medium and it's in a closed circle. So the same water is used over and over again. It has minimal heat losses, so single-digit percentage points over several months. And the levelized cost of energy in locations that have enough direct solar radiation is at levels of EUR 50 to EUR 60 per megawatt hour, which makes it very competitive. And it's more competitive than batteries, particularly when looking at longer-term storage. Batteries are very efficient for shifting generation and supply by a few hours. But here, we have a system that very competitively can essentially turn intermittent solar generation into 24 hour base load, and this is what the system is going to be able to provide. So thank you very much for your attention so far. And I'm handing over to Clemens to run you through the -- our results for the third quarter.

Thank you, Georg. Good morning from my side once again. I will present you our financials for the third quarter, respectively, year-to-date for the first 3 quarters of this year. Before I do so, just also more of the highlights of the last quarter, what happened in Photon Energy, our main achievements. As Georg mentioned, we have connected in August this year of our so far biggest photovoltaic power plant in Australia, which is 14.6 megawatts in Leeton, a fully self-developed project, which we from day 1, until connection, managed completely ourselves. We expect from that power plant to generate roughly about EUR 1.3 million in turnover per year. As mentioned, it was collected on August. So you will see the first numbers coming in already a little in Q3, but in Q4 and going forward then. We could grow our pipeline only in the third quarter by 53 megawatts in Europe. And on top of that, we thought that we have announced the big project in Australia with RayGen, which Georg just explained. We also have launched recently now our green bond offering, a new issuance of a new bond, which is 6.5% coupon, which is aligned with the green bond principles, and we received on that as well as the second-party opinion confirming that plus a rating from KFM-Mittelstandsanleihen -- that came from KFM-Mittelstandsanleihen Barometer from Germany with 4 out of 5 stars, which was marked attractive, which we're also very proud of. As we also announced actually today in the morning, the exchange offer that came along is that new issuance, which is still running. The exchange offer was very successful. So it was perceived by you or some of you, thank you very much for that very positive with an exchange rate of 47%, so EUR 21.2 million roughly until last Friday. Exchanged from the old bond to the new bond, which is an extremely or very high ratio and which is a clear confirmation and commitment from you, from our existing bondholders into our company to the strategy that we are following in the work we do. So thank you very much for that. What'll also happened this year, and we announced this, there are some regulatory changes in the Czech Republic and in Slovakia. This is also visible in the Q3 figures. I will show you that in a second. Where basically, in the Czech Republic, we got the solar levy that was already existing in the past, was increased from so far 10% to 20% for the power plants, which we connected in 2010, which is the minority of our power plants and for one power plant, which was connected in 2009. There was an implementation on newly solar levy now for 10%, which has an impact on our EBITDA. On the other side, there was in Slovakia as well a change in the regulatory environment in Slovakia. There was a different change. There, we had a fee-gain tariff of 15 years. So the Slovakia government decided to prolong that by 5 years to 20 years, which is principally a positive effect. So it synchronizes more with other countries for the 20 years of standard. However, to compensate for that, they decreased the feed-in tariff so that the total value of that power plant is untouched. However, we see that this will lead to a reduction of revenues and EBITDA in the upcoming years. Those changes will be starting from the 1st of January 2022. So we believe in the P&L visible on the revenues and EBITDA visible from next year. However, we have already considered now in the third quarter, the impact on the asset value as such. And we have announced as well that this impact might be up to EUR 4 million after precise recalculation and [ trough ] as of the date of the revaluation. End of September, the impact was actually smaller than expected. So it is still at this EUR 2.9 million in the comprehensive income and that we jump to this in a second. So much about the key highlights. Oh, wait, wait. Yes. Well, I will go into this in a second. But, [ recently ], In the Czech Republic, we have, as mentioned, the additional solar levy. We are working hard to compensate for that. We will do so, one step for that is basically that we will go to or change from the feed-in tariff to the so-called green bonus scheme. That is something you can do in the Czech Republic on a yearly basis. So you can decide, actually, now until the end of November, for which scheme you want to go. On the feed-in tariff you have this fixed price guaranteed. On the green bonus scheme, it is that you as well get a certain green bonus pay, which is a little lower than the feed-in tariff, about EUR 50, roughly, per megawatt. Our -- however, you keep the electricity and you can sell electricity yourself on the market, given the current market prices and development that we expect going forward. We will do so and we expect that we can achieve with this higher revenues on the market and overcompensate for the green bonus and thus also compensate at least partially for the additional solar levy, so that the impact on EBITDA and revenues on this case the Czech portfolio will not be as expected as well going forward. Well, there was a question related to the adjustments in the Czech Republic and the last question was whether we agree with these decisions. And I think the short answer is no. [indiscernible] any of the retractive measures taken in the Czech Republic. Of course, we hope this will not happen again. Now we do hope that for the remainder of the feed-in tariff period until 2029, '30, respectively, depending on when those parts will were connected that this has been at least for the foreseeable future. Of course, we never know. But we do believe that our service ability should come to the sector. And it's also important to mention that now the Czech government, I think, is more aware that solar has to play a role in increasing the share of renewables in the Czech energy mix. and hopefully, the propensity to temper with those legacy investments is very low. But of course, it is political and one never knows. But for now, we do hope that there will be a lot more coming.

Okay. Just also going back to the bond that we have issued to summarize here. So it is a green bond, which will have around 6-year duration maturity in 2027. We are intending to raise up to EUR 50 million and offer a 6.5% coupon, which we, as in the past for our previous bonds will be quarterly. The offer is still running until the 17th of November, so until this Wednesday noon. We have this rating from imug our second-party opinion on the sustainability and from KFM on the bond as such. The bond will be trading on the 23rd of November on the open market of the Prague Stock Exchange, also like our previous bonds, and as we can seen in the previous bond, there was quite some liquidity in that part. And so it seems to be attractive for investors to invest and also some of them to not full time, but to increase their exposure. We have also been set for pretty much the similar covenant as we had in the last bonds. So we still the dividend restriction that we had in the last quarter as well, we also still stick to our equity ratio of 25% minimum. This is something where we see, especially to give all the investors security, but also for us, we see between 25% and 30% equity ratio as the sweet spot for financing. The other -- other comments are pretty much standard from cross default, negative pledge, pari passu, and the change of control-clause. On top of that, we have a transparency clause, newly added which means that we will regularly continue to publish information. We are a very transparent company in the past already from our reporting standards. And this time, we also mind ourselves or commit ourself that we deliver information in time. If not, we will -- we are willing to compensate this to investors with an additional coupon of 1% per annum paid for this quarter -- for the quarter of default of a reporting standard. The bonds will be selling in the denomination of EUR 1,000, as the old bonds. And as mentioned, we'll be starting trading on the 23rd of November. So this was just a pretty question as well, coming back to the numbers now and getting into more details here. We generated in Q3 and for the numbers, you need to understand our key performance indicators, which since the main revenues come from our proprietary portfolio, the growth of that is very important. So we could increase our portfolio to 89.3 megawatts. As of the end of the third quarter, we generated so far in the first 3 quarters 82.3 gigawatt hours, quite a significant increase towards last year. We expect this year to generate still roughly around 100 gigawatt hours, which will translate directly into revenues and our -- the capacity of that portfolio, as we headed, will generate on a full year basis like next year already 120 gigawatt hours. So this is already secured business or secured revenues we can expect from our Investments segment. As mentioned in the third quarter we had some 50 megawatts to our development pipeline. Overall, this year, it was 238 megawatts already. Those are or this will be -- those are figures you will then see in the future in our portfolio, hopefully, respectively, also in our P&L statement coming down soon. And we connected 14.6 megawatts in Australia in August there as well. So this is the key performance indicator on the O&M side, we've grown to 330 megawatts, which generates recurring revenues in our P&L. Which brings me to this already here, our financial results for the first -- for the third quarter have been quite good. We're quite happy with those. We could increase our revenues to EUR 10.2 million, so 13.8% compared to the same quarter last year. The main growth coming from electricity generation, which is for us the most important revenue stream, as mentioned, and also then having biggest impact on the EBITDA which could be growing to EUR 4.4 million in Q3 as well a 13.4% increase compared to the previous year. On a year-to-date basis, overall revenues increased to EUR 24.6 million, so a 6.3% and here as well, especially to mention the revenues from electricity generation growing by 11.1%. So this is continuously quarter-by-quarter, now be centered to EUR 16.4 million for the first 3 quarters. The EBITDA year-to-date is EUR 8.5 million, a little lower than last year, first 3 quarters. However, still higher than the full year 2020 EBITDA, and you hope to still grow this to the end of the year, a little more to also show you how now or -- how that we can demonstrate how the growth strategy that we are following, mainly on the growing generation capacity is also showing positive results on the EBITDA line. EBIT has decreased a little compared to last year to EUR 416,000. That is mainly due to higher depreciation, clearly, and that we had in -- due to the growing portfolio. Our net profit is a little bit better than last year, but still negative. This is due to a positive effect on the, let's say, the derivatives on the -- which is in the financial costs shown and the revaluation of those. But importantly, in our company, that cannot emphasize all that enough is to look at the other comprehensive income and the total comprehensive income just on the bottom line. The other comprehensive income, which is basically the values that we have created in the previous periods, respectively, in that period, the main part is the revaluation of our assets that goes in there, which is basically once we build and or have fully developed, built and connected a power plant, we reevaluated against market prices from -- compared to our actual investment costs. This is some very discounted cash flow models, where we create the present value of the power plant line which is considered to be a market value of such a power plant and deduct in the actual investment costs we had, and this difference is the other comprehensive income that we had this year for the -- this quarter now for the power plant in Leeton, which had a positive effect of almost EUR 3.2 million. On the other side, we had this negative effect from the revaluation based on the regulatory measures taken in the Czech Republic and a little in Slovakia coming to this, which was minus EUR 2.9 million. So the net effect you can see here is small but still a positive other comprehensive income, but much less than we would have expected or that we would have had without this regulatory changes so that the total comprehensive income bottom line in this quarter is negative. However year-to-date, we are positive with plus EUR 1.1 million compared to EUR 1 point -- almost same amount last year, EUR 1.2 million. So we're still on a good way there. And this is a positive contribution overall this year still to our equity. This -- maybe the lag right here is that in our project development, the majority of costs related to project management gets expensed. So that is also a good pressure on our EBITDA. This is going through the cost. We, of course, the pipeline as we have it and as we continue growing it has a lot of value in itself, which does not show up as the projects progress. That's a value that does not show up in our balance sheet. And it only gets realized that value once we have turned that project into a connected power plant through the revaluation that according to IFRS 16 that comes into play. So only when they reach full success that's the value that's being created at the start of the value creation is in the project development. So on the [ ones ] we have full successful. We also capitalized already on projects when they're ready to build, but hopefully when it's a connected power plant. So essentially, the increase in the investments we have made in project development and have been significant in the last quarters actually hurts our EBITDA because it gets [ very much too ] expensed, I think.

Thank you. From the -- coming from the total comprehensive income that goes into equity, looking at our balance sheet, we could grow our overall balance sheet, EUR 275 million in the first 3 quarters of this year. This is mainly consisting of non-current asset to EUR 140 million, which is basically our photovoltaic power plants. The rest are short-term assets and especially liquid assets, which is important for us was EUR 18.9 million. So there is quite still strong security in the company to fund clearly our future development and construction activities on the asset base side. As mentioned, the equity has grown to now EUR 50.4 million, an increase by almost 26%, which gives us an equity ratio of 29%, respectively, the adjusted equity ratio, which is important for bond governance is 32%, which is actually on the upper or even much the upper range where we want to be, but this is already in line with now the additional product placement that we intend to increase liquidity in the company and give us more power to speed our development going forward. The remaining parts are noncurrent liabilities, mainly, which is basically the existing outstanding [ bond ] of EUR 45 million and the rest is almost all of it is project financing, long-term project financing on the project level, which is in local currencies for our existing portfolio. Our whole portfolio that we have so far connected all the 89 megawatts is long-term refinanced with local banks. This leads me then to the cash flow statement for Q3, respectively. Year-to-date, in comparison to last year, our operating cash flow is slightly or is a little bit lower. However, it is positive, as announced already for the -- after the half year figures, it turned into positive again. Clearly, we had some extraordinary reduction of working capital in the first 2 quarters. Therefore it was negative there and now it turned positive. It was EUR 2 million in Q3 only. Even there, we have now still a negative effect basically by preparing for the fourth quarter. Mr. Hotar mentioned it before that there is -- we can see that there is a certain limitations on the supply chain. We have secured capacities and secured inventory basically or components that are on stock now. So we have them already, paid for them as well already. So this is basically a negative impact on the operating cash flow. However, we will sell them in Q4 and therefore, increase not only our results, but also then have a positive or an extraordinary positive impact on the operating cash flow and increase that in further more. The investment cash flow is pretty much in line with or a little lower than last year. Year-to-date, EUR 10.8 million or EUR 10.9 million compared to EUR 14.3 million last year, and this is compensated by a positive financial cash flow from EUR 11.3 million, a little higher than last year, even this is mainly related to the equity placement that we did in the second quarter, if you remember, we placed shares first time basically as we went to the financial markets with share placement, where we raised EUR 7.7 million to our equity and also cash into the company. This puts us now with at the moment, end of Q3, EUR 10.8 million in cash available for further development and construction. So we feel, as mentioned, it is a quite strong position. However, we expect -- right, currently running bond placement. We expect additional liquidity to come in that puts us in a very strong position going forward is to turn development activities, respectively, the construction activities, we also intend to start a running now and will increase speed up in the no year very soon. So this is basically all to the financials in a quick run through, and I could see that there's already plenty of questions coming up. And I would say that we go through those questions.

Okay. So the question in Polish about our project in -- with the defense department in Australia and the applicability of PFAS -- of our technology to PFAS. First of all, we would like to reiterate is that our technology works on a wide range of content. So we have had in the last couple of years, we have had 2 projects in France, 1 in Switzerland and 1 in China for other contents. So PFAS is something that was -- our focus on PFAS is the result of information from our colleagues about 3 years ago that this is a significant topic in Australia. And actually, in the remediation industry globally, remediating PFAS contamination is one of the, if not the hottest topic, or conferences organized just on this. And the issue is that these PFAS chemicals are very stable. So they don't degrade in nature. There was a quote of forever chemicals. And while there are some it's possible to filter those PFAS chemicals and then dispose them thermally in 1,200 degrees. There's basically no technology out there that can break them down. There are some attempts to use plasma by this university in the U.S. that has a project, but it's all done only in the lab and scaling that up to real-life situation in-situ 10, 20, 30 meters below ground would be a challenge. Our technology has been used and applied in those settings. So now we only -- we need to prove that our technology can also work on PFAS chemicals. And there has been some delays. I think it's almost part of the question that we originally said that we should expect some results during the summer. There have been certain delays. I mean the last month and that of course probably the last 3, 4 months has been locked down in New South Wales, which has been very severe. I think you've been able to see in the media. And -- but also before that, and we're dealing with very prepared [ critic ] and very careful organization, which actually in this project is using external consultants, pretty much every step we make gets checked and double-checked and triple-checked. We also need to get permits before we did not expect initially from water authorities to inject -- be allowed to inject the material. And we actually got that permit just before the lockdown started. So to cut the a long story short, we are now at a point where our colleagues in the next couple of days should be able to finally physically go to the site, which they have not been able to do in the last 3, 4 months, and inject the material. And then it's a question of a few months to have the results properly measured and documented, I think we will know where we stand in terms of efficiency. The Australian department of defense is very much in the spotlight over the PFAS issues in multiple locations. So they are very, very supportive. And so we are very confident also for -- In parallel, we still run reacted test. So we are very confident that the results will be positive and not only allow us to fulfill the contract we have, which is for the cleanup of the [indiscernible] side. But clearly, there's more opportunities that could follow. So on that basis, to completely answer the question. Yes, we do see particularly the PFAS opportunity to be able to take the water business to a level that where it would become a second pillar of our business. [indiscernible] So high component costs, lower margins and development. Well, I think this is a -- so the question is, do you think the higher component costs should translate into the margins and development? I think this is an interrelationship that we are not exposed to. I think this is definitely going to be creating a lot of headaches for developers who are developing projects to sell them and in particular, in a situation where the projects have gone into an auction or a signed the PPA. So basically, where the revenues and the value of those future revenues are very clearly defined. So yes, in those situations, which is not our case, clearly, there are some interesting discussions for sure happening between the developers and those investors buying those projects. And clearly, higher investment costs should lead, in theory, to lower project prices. This is not our case because we don't have that stage where we pass on our projects to external developers at least here in Europe. So we develop those projects for ourselves and turn them into power plants. And there, I think it's important to reiterate here our strategy is to go merchant, where the recent increase in energy prices has been significantly more pronounced than the increase in input costs. And therefore, we don't see -- I mean, yes, we may also end up with have high investment cost we would have had 6 months ago, but this is more then -- be more then outweighed by the increase in energy prices on the market. So I hope that answers the question. So it's not really an issue for us. I think it will be an issue for other than us. When do we think we should lower our total silicon annual module prices? So clearly, there have been 2 drivers, which I also mentioned in the question, one is transportation costs from China to Europe, and now the energy curtailment in China and less clearly, the majority of modules are still being produced in China. Some of the manufacturers we work with also have factories in Vietnam, Malaysia and the Philippines, but that's typically just a small share of the overall production capacity. So clearly, the situation in China does have an impact. So in terms of transportation costs, what we -- which have gone up dramatically over the last year from let's say, a standard price for a container from China to Rotterdam used to be somewhere between $2000, $2500 and now we are $15,000 spot prices even get to $20,000 apparently. So we hear from our manufacturers is that they have been able to secure framework agreements for next year that will push us below $10,000. However, it's still a significant impact on price. The energy curtailment is something that seems to have caught the most manufactures by surprise. And so clearly, it's not only their manufacturing plants, but the modules are being signed with [ proposal ] their supply chain. So clearly, there's a certain disruption. Our expectation is that in Q1, Q2, that situation will normalize, that's at least the information we're getting from our manufacturers. So clearly, procurement will be challenging. I think as I mentioned before, I think this is where our long-term relationship with the largest manufacturers and the fact that we are constantly off-taking from them will be helpful. And clearly, what you need to get used to this higher prices. So EUR 0.20 per watt peak is history and our prices are edging closer to EUR 0.30, so somewhere between EUR 0.27 and EUR 0.29. Again, I think this will create a lot of problems for projects that have fixed offtake prices with interruptions of PPAs, which means that we also get delayed. So that also may also have an impact on the demand at least coming from Europe. And we believe that for our needs, that means our projects will be a merchant basis, but also for external EPC, it's actually a major problem. It's just a [ flow-through ] price. But in no certain year within this business, we've seen various supply chain disruptions. I mean, this time, it's a bit more significant, but we have learned how to deal with this. How significant are hybrid deployments in your pipeline for the storage and what tech focus are you placing in this context? So I think the focus on RayGen is very clear. I mean this -- the original investment, but also the work that has been done since over the last 18 months, I think sense a clear signal that we strongly believe in the RayGen technology and I think the size of the project in South Australia. And again, there will be more projects. Again, it was important to point out, these are our projects. So we -- it's our development. We control the project drivers. Clearly, these are very large projects. So we need to find ways how to finance them, most like not through our balance sheet, but through [ Cedarwood Financial Partners ], but we are in control. And this sort of value increase just in the project, right, is something that fully grows to us at this point. So it's just a project development, getting it to the rate of good stage is something that will create significant value how we're going to address the implementation phase after ready-to-build is something that I think all I can say is it's already being worked on and there's multiple options. What we can say is that this project and RayGen and its technology is gaining a very, very significant attention from very serious players, both in the energy industry, but also the financial sector. And again, I think the last round where the largest Australian utility, 2 companies from the oil and gas sector, invested is a very clear significant direction. I think the other thing I'd like to say is that we see now also a growing concern among various financial institutions and investors about the life cycle impact and also the cleanliness of mining input material for traditional batteries is getting more attention, and the fact that here, we're using our latest technologies using water as a storage medium is seen as a very, very significant plus of this technology. Having said that, we used batteries in Lord Howe. Clearly, there will be also batteries behind the meter installations in Europe and in Australia. And of course, we have some other projects where we are considering adding storage, [indiscernible] projects. So storage is clearly going to play a significant role. In many situations, batteries, but for really large-scale utility scale. In Australia, in particular, and over time, when we scale to jurisdictions, becoming relevant for us. The RayGen technology has clear and significant advantages. And as was the key development partners of RayGen we have, I would say priority access to the technology, which puts us in a very strong position. In water business, where M&A play in the growth strategy, I would say at this point in time, that's not really a priority. I think we have a lot of across all 4 areas, we have a lot of organic growth opportunities, which is depending on at the moment. Next question is [indiscernible] margins.

[indiscernible], and I can jump into the next one. And you also mentioned the solar levy in the Czech Republic already. Maybe just 1 thing to add here. As mentioned already, the impact of the solar levy in the Czech Republic on EBITDA would have been, if you just take it as [indiscernible], was the increase of the levy, this will have an [indiscernible] of up to EUR 1 million on the EBITDA. However, there is already one positive effect is basically that year-by-year, the feed-in tariff perspective we also have the green bonds which gets indexed by this year is, again, like in the previous years, 2%. So this is where the other part increased with the green bonds, we will compensate a bigger part of that. On top of that, also to mention here, clearly, you will not see next year when this comes into force a drop in revenues from this because we have already overcompensated with our growth with the addition of new power plants in Hungary, this revenues in this Australia now coming in as well. so that we will still have growing revenues from electricity generation and growing EBITDA coming out of that. That we do not disagree -- that we do not agree with those decisions, it's clear. I think we have mentioned that regarding EBITDA for Q4, I mean, we are not giving forecast on financials. However, if people bake in our numbers, you can see that over the last years or there is a certain seasonality in our business between the quarters, Q1 and Q4 traditionally are weaker than Q2 and Q3 due to the sun irradiation on our power plants. However, in the past years, Q4 EBITDA used to be always positive. Only last year Q4, we had negative because of some adjustments and going on the main market. So I don't want to say that we want to surprise you, but you will see how we come back when you look just on the key performance indicators and how those are developing, I think the trend is quite positive.

And I think it's also important to point out that the -- Australia is in the Southern Hemisphere. So those 14.6 megawatts will -- are now entering the phase when they'll be producing that to see the substantial part of that annual production volume. So it is a bit of a hedge. Clearly, our energy generation is seasonal. Now with the first 2 significant plants in the Southern Hemisphere will be certain adjustment, but will also be visible in Q4.

Go then to reporting, would it be possible to put in monthly reports already and changes in additional [ entrench ] showing how much [indiscernible] Regarding our reporting, I think we are -- Photon Energy is reporting extremely intensive and up to date. I mean, beside all the legal requirements of most companies on the regulated market, [indiscernible] they just report half year figures and annual figures. On top of that, we have financial reports on a quarterly basis, which is already something which is not required by the stock exchange that we do from Investor Relations point of view. And on top of that, we have, as you mentioned here, the monthly reports where we want to give investors an additional insight into the company. From a timing point of view, what we do there is really, we want to report also accurately in time so that we can submit such a monthly report when it is closed after this month closing, around 10 to the 15th of the following months. At that time, we gave an indication on the -- or we can give clear numbers on the electricity generated. And by giving, I think, an indication of the feed-in tariff's publishing together, we said everybody can do his own math on what that means for the expected revenue from that business. However, giving a precise revenue number, we have not closed at that time when we report the accounting numbers properly. So we would as well just give an indication of what the number was.

I would say maybe now as we grow our portfolio by power plants that are running on merchant, maybe it's a good moment in time to evaluate how this could be beneficial to actually adapt the numbers. But so far by being giving really detailed numbers and feed-in tariff doesn't change. We thought we're giving enough guidance, but we can review that as the portfolio changes and grow. And with respect to the particular departments, I think here, we can point out that we have a -- in the quarterly report, there is segment reporting. Maybe we can -- and the cost of the reviewing that how this is provide significant -- relevant information maybe as a business growth we can review that...

I think we're going a little too much in details looking on a monthly development also in our business is long term set up. I think it is with giving quarterly financial statements, plus giving the segments there where you can see what comes out of the Investment segment, which is the electricity generation our solutions segment, the EPC business, the technology business, which is separately reported. So far, the Water segment is in Others because of the materiality level. But in the future, we will disclose it as well and separately that contributes more towards the business figures. And I think it's very important to also see this in a moment, a big trend. I think it doesn't make too much sense to dig into a monthly change on those figures.

The next question is on technology sales and net contribution. Well, this is -- I think what we can say is that our technology sales over the 13 years we've been doing this has always been profitable, [indiscernible] and has always contributed. I think this year, we expect a strong contribution in last year, but what we're really eyeing is the next year, where we see significant growth in demand. As said, we have launching web platform that will increase our throughput capacity. And last but not least, also batteries are becoming an additional item that will -- high-value item and also the average gross margin we're achieving on batteries is higher than on modules and inverters. So we believe that it will be a stronger contributor than it has been in the last 1 or 2 years. With our opinion on our current market capitalization, I think that's a very, very tricky question that we have to be very careful. We're not -- we cannot comment on our share price and our valuation. I think what we can say with respect to the '22 model last year, I think when you look at the market, there has definitely been a wave of excitement about the solar sector in Poland, which has not only been relevant to our shares, but also of our peers. When we look at the share price of those peers they're also below the levels achieved at the time. So sectors come in and go out of fashion. I think there are ways to try that are quite normal. I think on our end, of course, we're highly motivated to increase the long-term value of our shares personally as a major shareholder. I think that its motivation is clear. And we believe that our strategy will lead exactly to that. So sometimes the market will see our efforts more positively than at other times. But we think years ahead, and that's where we're going. So coming, it's a question about the 300-megawatt project in Australia. So I think I explained it, but just to wrap it up again. So this project is our initiative. So we have our own project company that is developing, that signed this pre-purchase agreement for the land and is obtaining all of the permits here. I would like to point out to a track record with the 5 projects we did with Canadian Solar, where 2 of those projects we got to the point where they want us out. But of course, our work extended all 5. Canadian Solar was happy to trade Maryvale for complete control over the projects that they kept. So I think we have a track record how to develop large scale in Australia. So this experience that we have gained over the last couple of years, we've never [indiscernible] into this project. So we control the project. The budget to get it ready-to-build is office size. And here, I think what we can say is that we only announced we signed this agreement. There has been 18 months of work on this already. So there's been already a lot of consultation with the regional government and local authorities. So we are very -- the South Australian government wants this project to go ahead. So there's a lot of support. So we believe the budget is well manageable within our means. And at ready to build this contract will be very valuable. And clearly, slowly the point in time is coming to think about how this project is financed. And from our point of view, of course, there are all options available. If possible, we would like to remain a shareholding in this projects essentially trade our project right into a stake in the final project. If somebody comes with his stupid cheque to buy the whole project that [indiscernible] but it's also fine. Clearly, we would like to be involved in the project as a general contractor and getting [ involved ] in the construction. So these are separate projects and time will tell. What I can say is we're getting phone calls almost on a daily basis from various investors and financial institutions that want to have a talk and see how they can be enrolled in this project. So from that point of view, it's already at this point in time, it's a great project to put us on the map with a lot of players in the industry and the financial sector.

Regarding the next question about reporting again about our diversified business model and about publishing figures, revenues and expenses on a project basis. Maybe here, you will see, again, if you look in our quarterly reports, you will see segment reporting at the end there, like those projects on Lord Howe Island or also in Poland, which were done for external customers are in the segment of solutions, then we have EPC business, the construction business that we disclosed revenues and expenses of individual customer projects is something we will not do and cannot do also from a competitive point of view. So please look at those also putting this on a monthly level. Again, the development is not -- our business is not so short term that it makes sense to look even on shorter periods there. And I [ hope to direct here ] as well to the quarterly reports that we publish. The next one, selling of electricity is a crucial source for the company for us to build proprietary power? That is true. This is our core focus to do so, and we are pushing very hard to do this as fast as possible. You mentioned there is some -- sometimes if you have the feeling, it takes long, respectively, that the pipeline is not changing. We just said when we presented before, the increase this quarter in Europe was about 50 megawatts year-to-date, above 200 megawatts. In Australia, we have EBITDA. It's large-scale projects. I think there is movement. But also here, please give us some time. I mean, sometimes we -- first, the development takes time. It's not happening from today to tomorrow. So if we publish monthly, yes, it looks sometimes something is not moving because the whole development process goes up to 2 years for large projects, maybe even longer even. For a fast project, it is still a year time to develop it. And sometimes there is also delays, as we have seen during the corona pandemic here in Australia. So please, give us this time. We are doing our best. It's not in our interest to delay any projects. We also have a keen interest to push on them and get them not only ready to build as fast as possible, but also then build as fast as possible and connected to the grid, so we can generate electricity, which is the core interest that we have.

Yes, I think we should come to an end here. I think this is all the questions, right, that we have?

I would just say one last thing to the monthly reports. I mean when we move to the main market, we could have dropped this channel of communication, which we did, because it was a requirement of NewConnect, we kept it exactly to be able to provide more ongoing information to our investors. We have been giving information on the performance of our power plants probably for a very long period of time, which added the development pipeline, I think we will look at how we can maybe provide some more information, relevant information. But clearly, we cannot go to the detail like showing the P&L on individually EPC projects and those really get those too far. But clearly we're open to suggestions. I think we've seen some now, and I think we will see whether we can provide some more regularity on our business lines. But those will definitely only be aggregated numbers.

Good. And thank you very much for your attention and your time, and looking forward to talk to you latest in basically one quarter time and we will present the Q4 figures on the company and the year-to-date or the preliminary or unaudited figures for the full year of 2021. Thank you very much.

Thank you very much for your attention, and have a great day.