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

Good morning, ladies and gentlemen. It's a pleasure to welcome you together with our CFO, Clemens Wohlmuth, to our webcast, where we're presenting our Q1 2022 Results. And as usual, we'll run you through our presentation, where we will walk you through brief introduction of the company, will walk you through our business model, the strategy and outlook, and then I'll hand over to Clemens to give you a breakdown of our results -- financial results in the first quarter of 2022. And last, but not least, we'll have space for our Q&A session, where I hope we will get a lot of questions from you. So our company in a nutshell, we have been in business since 2008. We are a Dutch company headquartered in Amsterdam. We have, particularly in recent months, grown very dynamically to over 150 employees across all the countries where we operate. We are active in more than 10 countries. We are listed on the regulated markets of Warsaw and Prague Stock Exchange and also Open Market of the Frankfurt Stock Exchange. Last year, we obtained a sustainability rating from imug, the results are very good. And very recently, there's also been research coverage taken up on our stock by an independent research house in Germany called AlsterResearch. The report is available on our website. The key highlights of our solar business, which at this point in time accounts for the majority of our revenues is that we currently own a proprietary portfolio of 91.9 megawatts. And we are currently developing nearly 800 megawatt peak of solar projects across Central Europe and Australia. Our track record in terms of construction has exceeded 120 megawatts. And the portfolio of power plants in our ownership last year generated 103 gigawatt hours. However, the generation potential, the annual potential is well over 120 gigawatt hours, which means that last year, our -- through Australian power plants in Sydney we've connected to the grid in August and has not only been contributing to that total, but also to our revenues only since then, but on an annualized basis, the potential is 120 gigawatts. And in our O&M Division, we currently take care of about 280 megawatts, and that is a number that we are working very hard on growing dynamically this year. In our Water business line, where we have various activities. We have well taken care of surface water bodies extending over 600 hectares. We have so far water utilities on the well drilling and maintenance and decommissioning of over 3.5 kilometers of wells. And we also involved in the commercial launch of our remediation technology, which has particularly strong potential in remediating sites that have been contaminated with PFAS chemicals. So just a little bit more detail on the business model. We cover the whole life cycle of power plants, so from project development, which we do in-house, but also in corporations, external developers. We are involved in the procurement of the technology, the engineering of the plants and the construction. On the back of our procurement and components, we also have a, today [ very benefit ] growing distribution business for components, mainly modules, inverters. And this year, we -- we are -- we see very dynamic growth in the distribution of batteries. The result of our investment activity is that we have a portfolio, as mentioned before, that is generating electricity and that is financially the backbone of our Group. And last, but not least, we have operations and maintenance division, which takes care of our own power plants, but also those of external customers. In our Water business that we launched about 5 years ago, we're involved in water treatment in the future, also waste water treatment. As mentioned before, we provide services around water wells, mainly to water utilities. Then we have our water resource management services for surface water bodies, that means lakes, ponds with a particular focus on fighting the blue-green algae problem that has become a worldwide issue. And in Q1, we also managed to execute our first project in the Australian market. And last, but not least, our R&D activities are leading to the application of our nanoremediation technology to a highly interesting and -- interesting area, which is the remediation of groundwater that has been contaminated with PFAS chemicals. Our pilot project with the Australian Department of Defense is ongoing, and we see growing interest in the Australian market, but now also in Europe with the awareness of the problems represented by PFAS chemical contamination is growing very fast. In terms of our company's presence, so our headquarters are in Amsterdam. However, operating activities are concentrated in 2 regions in the world, one is Central Europe. So that in the Czech Republic, which was our -- historically our first market in Slovakia, Poland, Hungary and Romania. And the second major market where we operate is Australia through our office in Sydney. But as you can see in some of our services, we reached beyond that footprint, particularly in Europe, where we have customers across significant parts of Western Europe, but also Southern Eastern Europe, Bulgaria and Greece. So in the next section, I will talk about our strategy and our outlook as we see it and where our focus will be. So clearly, the core focus is to increase the -- our proprietary portfolio, and as a direct result, our electricity generation from these assets. So our major focus goes into developing projects and developing projects in such a way that we can build the most competitive power plants with the lowest levelized cost of energy in all the markets where we operate, which basically these days means building utility scale power plants on single access trackers with a -- an overbuilt ratio of between 1.3x and 1.4x, [ energy use and gas process ] modules so that we can create the most valuable or possibly valuable production profile as we sell into the market. So a key element of our strategy is that all the new assets that we are approving and putting into operation are selling electricity on the Open Market. On the next slide, I will be able to show you why this is a -- from our point of view, but also objectively the best approach at this point of time given energy prices. We are also increasing our capacities in our EPC division where, on one side, we see growing demand for hybrid projects combining electricity generation from solar and energy storage. And this -- the second driver, we see both in Central Europe, but also in Australia in response to the dynamically growing energy prices, there is out almost as far as I think virtually endless demand for onsite generation solutions, combining PV and increasingly also storage. In the -- in our O&M division, we also have very significant ambitions. And we have, in recent weeks, gained quite a lot of traction in the Polish market, which I hope we'll be able to report on soon. And we are also increasing our assets in the Romanian market. So that today already in all the 5 markets in Central Europe, Central Eastern Europe where we operate, we can provide full-scale O&M solutions to our customers. And, of course, it's also a very important element in our -- in the growth of our own power plant portfolio. In the -- in technology, which is our hardware distribution business, Again, the demand for components is very, very dynamic at this point in time, growing very fast. And so we've seen a very positive development in the first quarter and also the outlook for the rest of this year, but also 2023 is that volume -- the volumes of modules, inverters and increasing the batteries that we are distributing to our growing group of customers is going to continue along a very, very dynamic path. And last, but not least, as I mentioned already, the -- as soon as we have the outcome of our pilot project with the Department of Defense in Australia, we expect increasing a lot more opportunities and projects in PFAS remediation. And we've also been able to win a -- an advisory contract in Europe in relation to PFAS contamination with a -- at this point in time on this close customer, but it is happening and the interest is growing very fast. On the next slide, which is loading, the overview of the situation in the energy market or the energy markets where we operate. So as we develop our projects, we are looking and analyzing and making our decision in order to develop a project and not using a calculation of the levelized cost of energy across the expected lifetime of about 30 years of a power plant once it's commissioned. And based on the various input factors, which is the investment costs, the total investment cost securing the land, the project development costs, the cost of construction of the power plant, grid connection costs, the remediation in the given location and the cost of capital, we arrive at the levelized cost of energy, which, as you can see, is in the range of about EUR 56 at the moment per megawatt hour in Romania, and it's up to about EUR 61 per megawatt hour in Poland across the projects in our developing pipeline. Of course, Romania is relatively the lowest due to the higher remediation. If you compare these numbers with the numbers we presented 3 months ago, the stats have gone up as a result of growing investment costs, but also growing interest costs and therefore accruing cost of capital. But the good news is we are well below -- significantly below the current market prices, but also the forward prices. So across Central Europe, the prices are relatively homogeneous with the exception of Poland, where at least at the moment, when you look at the -- just as a snapshot, the spot prices yesterday, which is the base price, we are around EUR 140, but everywhere else in the region. And these prices are quite synchronized between the Czech Republic, Slovakia, Hungary and Romania, we are between EUR 190 and over EUR 200. And looking ahead, so the forward prices based on the futures contracts traded on the [ EX and Watsic ], where we can see that prices -- base load prices for next year in Poland are actually narrowing the gap. So they have come very -- come close to the levels observed in the other markets in the region, and where we are above EUR 200. But this is equally important, and I would say, underpinning our strategy is that particularly over the last 6 weeks, also the futures contracts that extend further into the future. And here, the most relevant market and liquid market is the futures market for electricity in Germany, where it's important to say that prices in Germany in this forward market are slightly below. So we're talking about a few euros per megawatt hour below the levels in Central Europe. But it is a good guide as base load contracts are traded all the way to 2032, that means 10 years out. And about 6 weeks ago, those prices were -- so the base load price in Germany for [ 2032 comes out ] -- has been around the level of EUR 85. And yesterday, the closing price was EUR 124, which means that -- so what we have seen over the last couple of weeks is that the expectation that the recent significant price increase is a temporary phenomenon, which will about within the next 12, 18, maybe 24 months and then revert not completely back to the EUR 50, EUR 60 level that we've seen still a year ago, but at least the level around [ EUR 80 ]. So that has dramatically changed. So the whole cost curve has moved upwards. And if we take the endpoint of credit instruments, so we've gone from EUR 85 to EUR 124 over the last 6 weeks. So this level is if I look at our Hungarian portfolio, where I think we'll be talking -- Clemens will be talking about this as well, where we have opted out of the feed-in-tariff scheme, which would, at this point in time, given current feed-in-tariff exchange rate gives about EUR 93. So even 10 years from now, if we take the German futures market as a guide, prices are not expected to being close to that, but significantly not that level. So definitely taking our assets out of the support scheme, which as the timing was a temporary measure may become actually for the long-term measure. However, coming back to the LCOE calculations that we have. And again, this LCOE number already incorporates an adequate return on our investment into these power plants. So anything above is increases our returns above cost of profit and cost of capital. So as the market stands today, we should be able to generate significant excess returns on the power plants that we already have in our portfolio, but most importantly, also those that we are still developing and will be putting into operation in the next quarters and years. A few words on Australia. In the first quarter, our average selling price industry to market was around EUR 80. And given certain market developments in -- particularly in the New South Wales Energy market, which is that some of the large generators have announced that they're accelerating the retirement of the coal-fired power plants, but also it's not been a -- as a result, maintenance schedules or let's say maintenance -- there's no upgrades happening anymore, maintenance also probably is not at the level that it used to be. So as a result, one of the major brown coal-fired power plants in New South Wales had an outage and one significant part of the power plant will not come back into operation until August. So what we are seeing actually today is that the prices during the relevant hours from the point of view of the production of our power plants, prices are actually not going below AUD 300, which is about EUR 200. So yesterday and today, we are reaching over EUR 300 on our -- sorry, AUD 300, so EUR 200 approximately. And on top of that, we are still generating LGCs, which currently are worth about AUD 48 or [ EUR 32 ]. So over in Australia, we're seeing a significant increase in energy prices from which we are, of course, benefiting greatly due to our commissioned projects. A few words on an update on our developing pipeline. So what we already -- so what we've seen in the first quarter is that we have abandoned the development of a large-scale project in Hungary. So as a result, our pipeline has shrunk from 95 megawatts to 25.5 megawatts. But, of course, our -- we continue developing the remaining projects, Hungary remains a highly attractive market. There are certain regulatory changes in relation to grid connection, which are essentially leading to a -- or require a new approach from our side, but we remain very much committed to the Hungarian market, energy prices are very attractive there. So it's from a regulatory point of view a relatively stable market. And we definitely have more appetite, and we're also looking at the possibility to acquire late-stage and ready-to-build projects. So we definitely want to keep adding to our portfolio there. It's just that this specific large project we have decided not to continue developing. On the other hand, in Romania, we are now working very hard on moving ahead with the development. And I think if you compare this table to 3 months ago, quite a lot of megawatts have moved from early development to advanced development, and we expect to start building some of these projects still in the second quarter or at the very beginning of Q3. And we hope to the significant number of megawatts will join our portfolio before the end of the year. And we also expect a fewer power plants in Hungary to be connected. And as you can see, we have continued having dynamic growth in our pipeline in Poland, which has actually caught up with Romania. So I think we can say we have little competition between our Polish and Romanian teams, and now this competition is heating up in terms of completion of projects, we expect the first utility scale power plants in Poland to be commissioned in 2023. As in Poland, the entire pipeline that you can see here is developed in-house and the approval process is quite lengthy in Poland. On the other hand, and this is very important, all our power plants in Poland are also developed and designed on single access trackers. So we will end up with partners in Poland that we believe are the most competitive assets in the market, given the production profile and given the fact that all other developers develop and then they could build fixed structure power plants. In Australia, we are -- we continue working on our 300 megawatt project in South Australia and [ Norway ]. And also the process is going according to schedule. And one important milestone that has been reached is that the project has been giving, what in Australia, they call Crown Sponsorship or a state significant status, which essentially means that after a very profound analysis by the engineering department of the South Australian government, they have come to the conclusion that they want this project to proceed. And this Crown Sponsorship should allow a certain smoothening of the process. And in terms of ready-to-build status, we basically reaffirm the target date of year-end 2023. And in the meantime, there's really quite a significant engineering work going on in terms of grid connection study, but also in the selection of the various components that will be used. And maybe just as a little update on the technology that we are planning to use. So this 300 megawatt project is not a traditional PV project, but it is using technology developed by RayGen, which is a Melbourne-based company in which we have invested in 2 rounds, first in April 2020 and then the following round in April 2021. In the second round, we co-invested alongside AGL, which is the largest Australian utility than Chevron, an oil company, Schlumberger, oil services company and later on also Equinor joined the investor base. Currently, RayGen is in the process of bringing its first power plant in Queensland, which will have 4 megawatts of generation capacity, 3 megawatts of grid connection and [ 50 ] megawatts of storage. And we expect or RayGen expects that plant to be commissioned in the fourth quarter of this year. Just a quick reminder. So -- and the reason why we invested in RayGen is that there's obviously 2 elements which make this technology unique. One is that while the mirror field and the concentrator on the tower is, of course, the hallmark of all other -- most other CSP technologies, that RayGen has managed to do is to develop a photovoltaic cell that can replace in the focal point of the receiver that can withstand the high temperatures at about 700 degrees Celsius and make sure that the concentrated sunlight is actually used twice. So not only that the heat is captured that with all other CSP technologies, but actually the concentrated sunlight is directly converted into electricity. And the heat is then transferred into a high ventilated hot water pool, whereas the PV generated electricity is used to chill water in a second is high as the high ventilated water pool to about 5 degrees Celsius, where it's in the hot water pool, it's just below boiling point at around 95 degrees. And then when electricity is needed on demand, an Organic Rankine Cycle engine, which is a low pressure gas turbine, electricity is generated. These ORC engines are commonly used in geothermal power plants all over the world. So the important bit is that pretty much all components in -- that form this generation and storage assets are commonly available components from various vendors. So the key element of RayGen's innovation is that PV cell, which is the proprietary patented technology, and, of course, the whole engineering concept and the system that runs the whole power plant. And coming back to our projects. So we have secured over 1,200 hectares of land in [indiscernible]. And the goal is to develop and build a pipeline with a generation capacity of about 300 megawatts, which means [ 300 ] of those mirror fields, each of which has about [ 400 ] mirrors and extends over 3 to 3.5 hectares. And the grid connection, we are hoping to get is, is 150 megawatt AC. And at the moment, we are trying to have storage capacity of 3.6 gigawatt hours, which would allow the plant to supply the 150 megawatts that we have in grid capacity for over 24-hour period. So the strength of this technology is that we can reshape the generation profile. It means, of course, generating electricity when the sun shines, but we can reshape that into any kind of profile that we can sell into a base load, we can supply on the outside somehow. So for example, a certain market or a country or a community can generate electricity using PV during the day and then the RayGen client supplies electricity at night. And we believe that this is a game-changing technology, and we have decided that in Australia from our own power -- own utility scale power plants that we'll develop -- the projects we'll develop will be based on the RayGen technology, and we're also looking for applications in other markets.

Maybe also interesting to add here is another 2 advantages of the technology. The one is that the storage part of it is based -- is water-based. So basically, it's ecologically also very clean and not as the downside of chemical batteries. I think also the dependency from China from components is reduced with this approach that all those components can be sourced outside of China, which are also in the future is going to be, I think this change in the -- or the disruption we have seen in the supply chain going forward, a strategic advantage.

So in conclusion from my part is, we just wanted to reiterate our guidance that we have published recently for 2022, but also that our targets for year-end 2024, which we already announced last year. And I will start with those. So we have -- so our goal is to have a proprietary portfolio of at least 600 megawatts peak. And that, of course, spreads geographically across the markets where we operate already. And our current project pipeline already covers more than the 510 megawatts that need to be added, but also may, of course, include other markets, but it's also important to point out that we also are working on investing into behind-the-meter assets. So a certain percentage will not be a minority, but it may still be in the dozens of megawatts in total of behind-the-meter assets that we -- we will be sending through the offtaker behind-the-meter electricity from these power plants. And at the time the middle of 2024, we want to have a pipeline of projects of at least 1.5 gigawatts. So clearly, our development efforts don't end with what we have in our pipeline at the moment or once we've reached this goal of 600 megawatts, of course, we want to continue developing and investing into solar assets. For our O&M division, our goal is at least 1 gigawatt, a large chunk of the growth from this point onward is, of course, based on our antennas portfolio. But, of course, we are constantly working on winning external customers. The important financial target that we have communicated is that for 2024, we want to grow our EBITDA by a factor of 5x compared to our 2020 EBITDA, which was EUR 8.4 million. So the target for 2024 is EUR 42 million, and, of course, there's some potential ups as well. So this forecast is based only on our strategy in the solar field. And, of course, the reason to hope that there is some additional contribution from our nanoremediation technology and in particularly in the PFAS space. Of course, as we grow, we will need to raise additional capital because adding [ 500 ] megawatts is a significant endeavor and that will be across various forums. And as you're aware, we have issued a bond at the end of last year, green bond. We have just announced our intention to potentially increase that. But, of course, we're also working with various project lenders and similar organizations to raise funding at the project level. And I think in general, given today's situation, both in terms of the significant shift towards green energy, but, of course, also the supply risks, particularly in Europe that have increased over the last couple of weeks, there is a dynamic growing interest from various institutions. Coming back to 2022, what we also did recently is we published our guidance for this year, where we're projecting revenues to grow from the EUR 36.4 million that we generated last year to EUR 65 million, which would represent an increase of 80% or nearly 80%. And that we grow -- and we plan to grow our EBITDA from the EUR 9.6 million last year to at least EUR 18 million this year. And the first quarter -- I'm handing over to Clemens in a second, can -- is already showing a significant dynamic into that direction. However, those of you who have been following us for a while know that Q1 is always our weakest quarter, and the strong quarters in terms of energy generation in the middle of -- in the middle of the second, of course, the first of those, which is Q2 and then, of course, Q3 has a significant part of our revenues is seasonally linked to energy generation. So over to you, Clemens.

Cool. Thank you, Georg. Good morning from my side as well. I'm very happy to present to you now our Q1 figures, which are -- have been so far our best Q1 results that we have achieved in the company history. Before we jump into the same numbers, let me just wrap up the highlights of that are reflected in those figures. This quarter, as Georg mentioned, we have last year in August connected our first large-scale power plant in Australia that goes merchant with 14.6 megawatts. So this full production now in Australia in the summer in Q1 is visible and is also mitigating a little the seasonality of our business we just mentioned between the quarters. We also have a power plant that was connected end of last year in Hungary, in Tolna, our first merchant European power plant that is producing in the first quarter full the first time. We just recently connected another power plant, but this is not now visible in Hungary as we have announced in a couple of days ago in Hungary as well. We have -- this is, I think a major part switched our Czech portfolio from the feed-in-tariff to the so-called green bonus scheme, which allows us to still sell the electricity ourself. So there we have a market exposure on top of a feed-in-tariff, which is a little lower than these Green Bonus in the regular feed-in-tariff. However, we overcompensated quite a bit with the much higher electricity prices. This is -- you will see in our revenues in a second. And what we also have done in Q1 is we switched the majority of our Hungarian portfolio temporarily from the feed-in-tariffs to a merchant approach. So these numbers will be visible only in Q2 then because that starts from 1st of April that we can sell electricity. Nevertheless, it's an important milestone. Georg mentioned already in Australia, the Crown Sponsorship in development that we have achieved in which we are very happy about because it will make our development efforts there of this large-scale project a little easier and hopefully also a little faster. We placed last year or end of last year in November, our first Green Bonus with the amount of EUR 55 million, and in line with this placement, could also exchange a significant part of the old bond that we had outstanding about EUR 21 million. And we're also very happy to get not only our -- so that we have a very -- support from our existing investors in the bond, but also we could attract a series of new investors, commercial investors, but also EBRD as a significant investor in this new bond. And as we mentioned also, we got our first independent research issued on the company by AlsterResearch with a Buy Recommendation, a clear target price, which is quite a bit above the current trading price with EUR 4.10 on that side. What does this mean for our performance indicators, I mentioned we have grown a little our pipe -- our project base so far to 92. -- 91.9 megawatt at the moment. Interesting to see here is, and we try to visualize this for you. The split between what is merchant and what is running under feed-in tariffs. So you could see that in 2020, our whole portfolio with 75 megawatts was running under feed-in tariffs. We have now added in last year the project in Australia on a merchant basis. And also we consider at the moment the Czech portfolio, basically merchant, even though we have this still significant feed-in tariff in form of the Green Bonus on top of the merchant. Electricity sales, so we had about -- we had as of Q1 about 30.9 megawatts under merchant. With the exit in Hungary of the power plants, this number will grow to 74.5 megawatts. So the majority, the vast majority of our portfolio is going to be merchant, and we'll be able to harvest those much higher electricity revenues. Just as -- to tell you what would have that meant this change from the 30.9 megawatts to 74.5 megawatts. So if you would have had the Hungarian portfolio already in Q1 merchant, we would have had about EUR 1.3 million more in revenues and basically going through to the bottom line into EBITDA as well.

EUR 1.38 million.

EUR 1.38 million. Sorry.

EUR 1.38 million.

EUR 1.38 million, to be precise. So from an electricity production point of view here as well, in Q1, we could grow our generation to 26.7 gigawatt hours, which goes directly into the revenues by 76.3% coming from the -- compared to the previous -- the same quarter in the last year. This comes from, on the one side, clearly the additions in Australia and in Hungary. On top of that, we also had a seasonal very good sunshine in the times that also our production was above our estimates. We mentioned before the market exposure, we tried to give you also a short overview of what that means in the different countries. As you can see in the Czech Republic, the Green Bonus plus Merchant enable us to realize an average revenue of about 700 -- almost EUR 770 per megawatt hour. So this is roughly EUR 100 per megawatt hour more than we would have had with the feed-in tariff. In Slovakia, we are still running under feed-in-tariff that has been reduced compared to the past, but prolonged for another 5 years, there we are getting roughly some EUR 260 per megawatt hour. In Hungary, the feed-in tariff is currently around EUR 97, a little depends on the exchange rate compared to merchant prices there that we have realized with our Tolna project of EUR 218. And in Australia, the merchant price we realized is -- was EUR 80 on those projects. And as Georg mentioned before, that number or the electricity prices have increased quite significantly in Australia since that time. So we expect here in Q2 also higher -- ARPU revenue per megawatt hour coming. What does this mean in the income statement? So when we look into the financials in our revenues, we could -- we had a record Q1 revenues, which almost -- we've basically doubled from EUR 4.57 million to EUR 9.1 million in total revenues. Out of that, just the electricity part, it used to be EUR 2.9 million grew to almost EUR 5 million. As mentioned just before, that number if you would have had the Hungarian portfolio already changed in Q1 would be by almost is EUR 1.4 million higher. We could significantly also increase our EBITDA to a record Q1 EBITDA from EUR 220,000 in last year to now EUR 2 million, so a significant growth. Here also, you can see this how the economies of scale are kicking in, in terms of with the growing revenues from electricity generation. There is no additional costs related to those. So it goes into the bottom line to the EBITDA. That also then turned our EBIT into a positive number from EUR 1.5 million to EUR 528,000. Also, this is a very satisfying result for Q1, as we just mentioned before. Then this -- we still have growing interest cost coming from our green bond that we've issued, which is also this quarter fully for the first -- in the first quarter before interest load in our books, which puts our net profit into a still loss position. However, compared to the EUR 3.2 million from last year, we improved to EUR 1.5 million, and we see a clear path that this figure will turn around in the future. On the bottom line, our total comprehensive income remained positive on the same level as last year. Last year, this was caused by a positive revaluation effect from our investment into RayGen. With the increase of the value of this participation this year, we have positive effects from the derivatives that we have on our financing in -- mainly in Hungary, where we secured interest rates and from the foreign currency exchange revaluation. Here again, this is non-cash and non-realized profit. I mentioned this year, like we had this in the past also negatively, this time it's positively, and this is helping us. Nevertheless, this EUR 1.8 million positive total comprehensive income is also then reflected in our equity that I will show you now. On the balance sheet side, our balance sheet remained quite sound and stable. If I can show it to you, here it is. So the total sum is EUR 196.3 million remained stable compared to the end of last year. We grew a little our fixed assets that comes mainly from the additional work in progress, we have -- we had in our -- on our development, respectively preparation side for construction and the new power plant that came online now in -- that we have built and came online now in May only, that is already partly visible here. We have an increase in current assets on the other side, which comes mainly from trade and other receivables, that is a little downside from the Green Bonus, which has a little different payment mechanism and the feed-in-tariffs, where part of the payments are delayed and this is invisible. On the positive side, it could significantly increase our -- or significantly could increase stably our equity with -- by 3.5% to EUR 53 million, which means that our adjusted equity ratio now is 29.4% compared to 28.6% last quarter. And we have decreased our long-term liabilities in line with our repayment schedules for the project financing that we have in place. Liquidity wise, you can see that our cash and cash equivalents decreased from EUR 39 million to EUR 29 million by EUR 10 million that I can show you in the cash flow, which is mainly coming from a Q1 negative. Operating cash flow, even though we had a positive EBIT of EUR 2 million due to the increase of, what, the negative effects on working capital by basically increasing receivables and a decreasing payables. On the other side, we have done several advanced payments to secure procurement as we have spoken, I think in several previous webcasts already is the supply chain to China on the one side is still disrupted and delayed. We can see raising cost of components. Therefore, we decided to secure more components already earlier in the whole process as we normally could. Speaking about modules for our own power plants, speaking about transformers for those already, where we have long lead times and not even longer lead times and trying to secure prices still, which we can see raising day by day. But also in the technology trading, where we see a huge room, mainly on the battery side, where we secured capacities and therefore, have an increase in these advanced payments, which all goes into the operating cash flow still, which, therefore, is negative. Still, our outlook for the whole year is that, that clearly turns then in a positive number as you can see last year over the whole year. And in the previous years, if you go into our figures, you can see it was about EUR 5 million to EUR 6 million always. Then we have an investment cash flow that was about minus EUR 900,000 only in Q1. The building season just starts, and as mentioned, the -- even if we procure already components for our own investments, they are still showing the working capital in the operating cash flow for the time because this is done by companies in our Group, which are procuring and trading those within the Group and then selling it to the SPV. And only once they are used at the SPV, we're showing an investment cash flow. And then we have the finance cash flow, which is basically our interest payments and the regular repayments from our bank financing. So there was no other activities in Q1 in terms of any increase of debt or of other financing instruments. This is roughly the whole Q1. As said, we are very happy with this so far best Q1 figures in our company history. And given the situation, as I explained before, with the electricity prices, the expected development of electricity prices, we are very keen and looking forward to our Q2 numbers to be presented to you in about pretty much between us. So I think then with this, we are at the end of the presentation part, and I could jump into Q&As.

I can see -- first question. Congratulations to the quarter. Thank you very much. You mentioned top of the green bond, have you got any details on the target volume? Well, maybe the quick answer is no. We have not yet. I mean, we clearly have a -- as we gave our guidance in terms of equity ratio, that there is the 25% equity ratio we clearly want to keep. So this would theoretically make the upper part of the amount. We are still in the evaluation phase talking with potential investors. It's going to be a private placement in case, I mean, so far we announced the intention, so it doesn't mean that it is happening. We are in this pre-selling phase discussing with investors. And after that, it should take not more than a few weeks, we will announce what exactly we are planning to do. So the next question is for the Tolna project, you're currently merchant. I think that the future might be a PPA, are there any talks ongoing? Well, at the moment, not. Maybe there's 2 -- we have, at the moment, 2 projects in Tolna connected this each 1.4 megawatts. One of those projects even has a power purchase agreement, basically, respectively, a -- from the auctions, they secured contract for difference, which we have not entered into. We can delay that until basically that -- for the duration of the whole contract, we did not enter because it's clearly wouldn't make sense commercially for the second Tolna project as well at the moment, it does not make sense. And maybe also general, the commercial power purchase agreement market, we still see is very much a offtakers market because there's only very few commercial or feasible offtakers that are also bankable. And so far, given the market development, we see no need there. Nevertheless, in the longer run, we are preparing ourselves for that, that we also will hedge certain parts of our electricity generation these power purchase agreements. So then the next question I can see, I think you mentioned operating cash in Q1, do you expect that to normalize over the coming quarters and that will be strongly positive? Yes, I mean, as said, we expected over the upcoming quarters or for the whole year, we will have a positive operating cash flow. I mean we see, as said, our -- especially the trading business growing quite a bit. We will -- we are monitoring that very obviously carefully on the ones we're very happy because of the growth of the business on the other side as well as a procurement behind it and the working capital and the -- we also monitor that carefully. Nevertheless, I would say, over the whole year, clearly, we expect a positive number here. And could you put some more color on the current supply situation of solar models in terms of availability and pricing?

Yes, well it's -- of course, it's not only about the modules, but about all the components as well. And the pricing of modules, but also it is -- it's going quite well. So on - with respect to solar modules, when we talk about production in China, that according to our current assessment of the situation is not that heavily impacted. The issue, particularly in the last couple of weeks has been the lockdown in Shanghai. So that is also transportation out of China. So some of our shipments and although the others in general have gone to other ports at Ningbo, where goods are slowing, but of course, the capacity is lower. But so it's a little bottleneck that's kind of getting bigger, but, of course, it has an impact on the cost of logistics. So production seems to be unproblematic, the -- without any major issues. The topic that's hanging over the Chinese manufacturers is -- actually the Chinese market itself, where there's always beginning of the year, the expectation is how much the Chinese market will absorb itself, and, of course, to a certain extent, it has priority. In parallel, the manufacturers are increasing their capacities that then, of course, now as the lockdowns in China, the market is also absorbing as many panels. So there's a lot of moving parts in this. So it's the manufacturing there doesn't seem to be a major issue at this point. It's the logistics, which is also becoming ever more expensive. But at this point in time, prices in Europe are more or less stable. The outlook we are getting at the end of the year is a mild increase. So we're talking [ EUR 0.01, EUR 0.02 ] not said per watt peak, but [ per cent ], and an expected easement of pricing pressure of prices into next year, but -- as the production capacity grows. But again, there's a lot of moving parts and also not in the European market, but also pretty much the whole world is now asking for more and more production capacity. And what has led to the increase of prices last year was not so much the selling prices it works, but the logistic costs. So there used to be [ EUR 0.01 ] per watt peak and it's now gone to [ EUR 0.04 ], and that has been accounting for the increase. So modules at this point in time seem okay. And then within Veritas, what seems to be impacting just like many other industries is a shortage of chips, which again seems to affect different manufacturers in different ways. And -- but at the moment, we are getting what we need. Then we have the batteries, where again some manufacturers have prompted was chips, but not our core supplier at least at this point in time. But of course, this -- when you talk about the whole power plant, we have other components. And there, the situation has been actually more dramatic and that is multi-structures, which, of course, are built from steel or aluminum, and their suppliers want, but mainly the pricing volatility is a topic. Of course, these 2 things are related, but it has become -- or essentially, all the manufacturers of mounting structures are buying spot because they're getting offers that are valid until the end of business day. So there's been an increase and it's extremely volatile. And -- but also on the transformers, the lead times have essentially doubled. So it used to be 12 to 15 month -- weeks. It's not easily double that. And we've had this for certain specific or special transformers, it's going all the way to 50 weeks. So there is an issue. So from the domestic point of view, for a megawatt, transformer is maybe 2%, 3%, but it can actually sit on the critical path of the project. And this is as Clemens mentioned before, we have decided to jump in early for our investment program for this year, which is mainly in Romania. So we have already secured security supply, and so the -- so that they should come in time in Q3 and Q4, where we'll be needing that. So hopefully, I've been able to add some color. It's definitely a very colorful topic at this point in time.

Then maybe also Georg for your last question. And the last question, he says from an investor. Why are spot prices so much lower in Poland than in Eastern European countries?

In the other countries.

In the other countries.

Well, it's a very good question. Well, I think I'm sure that there are people out there that can be more precise. But my understanding is that what helps in Poland is, of course, the coal-fired generation, which as opposed to our neighbors in Germany, they're not switching off. So clearly, there's a stable base load. And then, of course, there's significant wind capacity has been built up, then we have now exceeded, I think 7 gigawatts already of solar in Poland. So definitely, those renewable sources are also has sources that have 0 marginal costs when they get into the selling to the market, they are reducing energy prices. So I think it's mainly in the energy mix. And the Polish market is not coupled with the surrounding markets in the same or at least not with the German market. And those 4 markets that tend to move almost in the couple and price-wise move not completely lockstep, but with a high degree of correlation, which is the Czech, Slovakia, Hungary and Romania markets. So this pickup as we can see from the forecast, that gap is expected to close as we move into next year.

Good. Another question, how much as it is will you have connected to the grid end of [ '22 ] and end of '23?

Yes. So we cannot be specific. We have given the guidance to the market that we feel comfortable giving. So the goal of having 600 megawatts in our portfolio still stands. I think what we can say is -- and I think it's kind of obvious also from our explanations. When we talk about our portfolio, I mean, this will not be a straight line, it will be more look like a hockey stick. So clearly, we expect to add significantly more than last year to our portfolio. But -- and I think over the next couple of weeks, we will be announcing the start of construction on quite a few projects or power plants in Romania, given the supply issues we have and also there are some still final touches that need to be done on the permitting side. Of course, we will do our utmost to connect as many of those as possible still this year, but some of it may slip into January simply because certain projects haven't arrived in time or we now get to a little bit delayed in some of the permitting issues. So there will be definitely significant -- we're planning significant progress against our current 92 megawatts, but we definitely don't want to put out the number at this point. For next year, we expect faster growth and we'll definitely can do a bit more. But I guess the biggest jump is going to happen in 2024. So it will not look like a hockey stick than a straight line. But what is important is that, of course, the moment we connect such a plant, such plants from that moment onward, we are selling electricity into the market, and we start generating revenues that have EBITDA margins of [ 19.1% ]. So those are the -- so it will be accretive. And this is when we talk about the operating leverage in our business, this is what we practice to it.

And about PPAs?

Yes, the PPAs, I have to say, I mean, Clemens answered it a little bit -- I mean at this point in time, we -- I mean at these prices -- and I mean, maybe just that we've alluded to this in the presentation, when we announced that, for example, the recent connection of Tolna. I mean if we can build a pipeline back at Tolna for EUR 1 million, it's a 30-year asset at least, and in the first year, we generated EUR 300,000, EUR 400,000 of revenues and pretty much 95% of that is EBITDA. I think we just thank God and -- for the 30%, 40% cash return in the first year. And also watching the outlook, we don't feel in a hurry. And actually, from a strategic point of view, having this flow of electricity unencumbered by, I think dramatically increases our strategic value. And as did in our behind-the-meter project business, so we'll be installing capacity behind-the-meter. The strategic director of -- direction of travel is that our ambition will be to supply more electricity to those final customers, not just from the asset that's put in behind-the-meter, but also from outside. And if we have that electricity available from our portfolio, then not entering into some of the PPAs with others, just it increases our options. And with these energy prices, we don't feel any need, and things can -- nobody knows where energy prices are going to go. They're definitely going to be much higher than it used to be or well above our LCOE. Yes, there's exit, there's volatility, but we actually see that as our offering.

Just to comment on that -- the last question I can see is that the guidance for '22, our EUR 18 million EBITDA is made of existing capacities, mainly yes. I mean we have planned in our plants some additional -- some additions this year, which we generate. But as you also can expect, if we connect something end of Q3, beginning of Q4, the impact will be relatively small because the last quarter is going to be the weakest one. Nevertheless, so our plants that we have is mainly driven by this existing portfolio, the switch to the merchant approach that will generate additional revenues, but also the other lines that we have. So it's not only electricity generation. Also we can see a fast-growing technology sales as we have reported, if you look in our numbers for in the segments for Q1 now, but also that was already starting last quarter in Q4, and we still expect a lot to come also on the EPC side on top of that. The O&M business, also here, maybe we have not really pointed out so much was we actually lost 1 customer. So therefore the number dropped a little. However, we can see lining up new business there that we also see here, I mean we still have grown compared to last year in revenues. If you look in our segment in the external business, and we expect that for the whole year as well to still continue to grow. One more question I can see for Poland seems to struggle for now, what is the probability that none of the feasibility, early development will ever materialize? Maybe just it's not struggle, it's a different approach, Georg mentioned before. We are lacking -- we are behind in the development from progress in compared to other markets because...

No, we actually are not behind. Sorry. I'll take over. So what is called early development there is the projects that have grid capacity. And this is the main gateway in developing projects in Poland. At the moment, you have full grid capacity, you have a lot of value and you have -- so because as compared to the other markets, you have to do a lot of permitting work before you can even ask for full grid capacity. So that's all done, and here, we have the grid capacity. On the rest, there will be a probably a significant [ mortality ] rate. So those projects that we are preparing in and putting for the point where we can submit for grid capacity, and then we ask, given the congestion of the grid, there maybe, I don't know, maybe a 50% mortality rate, maybe even higher. And this is why it's so important that where we just keep signing up new land, going through the process and putting it in. This way of developing projects even with this mortality rate allows us to develop a megawatt at a fraction of the cost that we would have if you wanted to buy it from others, and for others that wasn't the problem. And I think -- well, we repeat that as we explained in some previous calls, the projects, the developers in Poland are developing are just not what we want and I mean, by -- and it's not easy to change. So to be specific, they are all developing that project with fixed market structure. And we want to build them on track this because it -- the trackers give us higher returns. It gives us a better production profile. And these are the assets we want to have. And no developer can offer that. And even when we look at the co-development or buying projects, we had to tell the developers that you will have to go back and we do the early permits, which would add 6 months to the process, where they told us that they had people who buy those -- are going to buy those projects as they are. And actually, most of these projects were not suitable for trackers because the demand would allow us to efficiently place trackers there. So we had to go and build this development in-house, on 30 plus megawatts, we have secured the grid connection. That's a major step forward. And there's a lot of -- so the fun behind it is getting bigger and bigger, yes, there will be mortality. But we're perfectly fine is that it takes longer, but we get -- we'll end up with the right assets in the market. And we are very happy with the progress. Every month we sign up new land plots. We have a great team in Poland that both in terms of land costs, but particularly the team that looks for suitable locations, identify ports. So we have a really great team, and we are very happy with the progress. No struggle at all. And it just takes longer. We've taken the difficult group, but at the end, we'll have the best assets in the Polish market.

One more question, then I think we should come slowly to an end, since we are 15 minutes over time. So we're speaking about 119 megawatts in Romania being commissioned end of '22, early '23. I think this cannot be directly said like this. Nevertheless, on the Romanian side, those 119 megawatts are in advanced development, which means that they shall be or those projects shall be buildable this year and next year. I wouldn't say early 2023, but this year next year. Nevertheless, they are still under development. And the project and development, the Minister said like the more we progress towards ready-to-build, the less likely something is happening that the project still goes down and it's not buildable end of the day. So still those 119 megawatts are not fully 100%. Also there can something still drop out. But we are working hard to get as much as possible over those projects in the next 2 years over the finish line. And still that there is, as you can see behind the 29.5 megawatts, 75.8 megawatts that those are progressing also to the right side to advanced development and become ready-to-build in the next 2 years. So yes. Then in this case, I would say thank you very much. At the moment, there's no more questions. If some other questions would come up, please feel free to send us to our Investor Relations, [email protected]. Any additional questions, we are happy to answer them also there. And thank you very much, and goodbye.

Thank you very much. That's it for me. Thank you for attending, and have a nice day. Bye.