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

Good morning, ladies and gentlemen. Welcome to Photon Energy Group's presentation of the Q4 2022 and the full year 2022 results and to the call. And Clemens Wohlmuth, our CFO; and are, select, the CEO [indiscernible], will run you through the presentation today. And we will quickly go through our business model and introduction of the company. We will do this a little bit shorter than usually. As most of you I think by now very familiar with our business model, but we will spend more time on explaining the imputing business model stemming from the integration of [ Leta ] the end of last year. We'll go through our strategy and then Clemens will walk you through the financials. -- and the outlook for 2023. And of course, we are open and I would like to encourage you to ask questions, which we will try to address at the end of our presentation. So just a very brief intro and overview. So we have been in business since 2008. So we have recently celebrated our 15th birthday. We are a Dutch company headquartered in the Netherlands. And after the acquisition of or integration of Leta, our total head count in terms of employees has grown to over 280. But in certain functions like sales, we also have contractors so that number is well over 300 at this point in time. So if you compare it to the numbers we had a year ago, there's been very significant head count growth organically since the beginning of 2022, but of course, also through the integration of left. So we are a much bigger organization today. We are publicly listed on the also and practice stock exchanges on the regulated markets and also trade on the open market of the Frankfurt Stock Exchange. We have 3 research houses covering us, all of them with a bi-recommendation and price targets, which still provide for a certain headroom against the current levels. And last but not least, we are also an ESG-rated company, having received a sustainability rating from Imug which has also provided a third-party opinion on our green bond that we placed for the first time at the end of 2021, but have tapped a few more times last year. In terms of the headline numbers in our business, as of the end of last year, respectively, as of now, we have a project pipeline project development pipeline of over 900 megawatts spread across Poland, Hungary and Romania in the CEE region and Australia. We have, to date, built over 120 megawatts, the majority of which for our portfolio, which still stands at 1.9 megawatts. However, we have 31.5 megawatts essentially almost a constructed, and we expect to be connecting those power plants in the next couple of weeks to the grid when it will start feeding electricity into the grid and generating revenues from sales into the day-ahead market. Last year, we managed to produce 121.6 gigawatt hours, which is an increase of almost 20% compared to the year before. And the headline numbers for Leta are that in its worth power plant, 290 megawatts of generation assets and energy users are aggregated. And one of the key activities of Leta is providing flexibility through demand-side response services in the Polish capacity market where this year, 134 megawatts have been contracted at the end of last year in December. We succeeded in winning 157 megawatts for the year 2027 in the so-called main auction, which always happens. -- slightly more than 4 years before the year in question. And here, the next important milestone for us will be the auction the so-called additional auction, which happens about 9 to 10 months before the beginning of a given year will take place in mid-March for 2024. And there, our goal is to -- actually it will take place on the -- I believe, the 15th of March. And the goal is to increase significantly our business volume in terms of contracted DSR services from the 134 megawatts provided this year. And our stated goal is to get to at least 300 megawatts. So we'll see how the auction goes. And what is important to point out that these is a very stable revenue and contribution margin block for us going forward. And last but not least, we also have our water business line, which has also been growing last year, and I will also provide a little bit of an update on our activities in the area of in-city remediation, in particular as it relates to the remediation of PFS Chemicals. So our presence is spread at this point in time over 2 continents, Europe and Australia. As mentioned before, the pipeline is over 900 megawatts. We have been able to increase it last year, and we definitely in those markets where we already have a pipeline plus also countries that we have currently under observation or we're looking for opportunities. So we believe that there will also be some additions in the next couple of quarters. In terms of installed assets, we have 15 megawatts in the Czech Republic, 10.5% in Slovakia and Hungary stand at almost 52%, 14.6% in Australia and the 3.5 million, as I mentioned, should also come online in the next couple of weeks and months. So basically, until middle of for the beginning of Q2, we expect all of these power plants to be connected. Last year, we also managed to grow our operations and maintenance business from slightly over 300 megawatts at the beginning of the year to 380 megawatts at the end of last year. And this has been a very significant degree driven by our success in gaining a strong porto in the Polish O&M market. where we have managed -- when we started at 2 megawatts at the beginning of 2022. And by the end of the year, we had signed up close to 100 megawatts which by we had taken over into operation slightly less than 70 megawatts. So we've really come from virtually 0 to already a very sizable number. And this year, we see and expect continued growth in Poland. Of course, our own power plants that we are now connecting and still glad to build later this year, will also drive our growth in Romania. And we also see there a lot of potential for the business. but we also believe that we'll be able to add customers in the other parts of the region. The important thing here is that we are most likely only O&M provider that has a coverage of this core region in Central and Eastern Europe and can service investors into PV assets across this geography. I already mentioned the new Energy division, which is essentially left, which we combined post integration with our behind-the-meter division or business line. And what we have is energy trading licenses in 6 countries. So Poland, Hungary, Czech Republic, Romania and Slovakia. So exactly those markets where we have assets, and we're also trying to launch our comprehensive develop our comprehensive pandimeter services plus Serbia, which at this point, however, we have not activated yet. I mentioned already the asset or the outside response aggregation. And again, the auction in March will be a very important point for our success in growing that DSR business in Poland, and we are strongly believe that we'll be able to increase our market share and also beyond 2024 to keep increasing the volume of TSR services provided at a steady pace. So a few more words on that on an integration of Leta, which happened in the -- mainly in the fourth quarter of last year and was finally concluded on the 1st of February this year. So after having in 2 successive rounds in 2020 and 2021 acquired a 24% equity stake in letters previous financing rounds. We are in the first step in the next step, both all the other financial investors in Q4, which raised our stake to over 60%. And then in the last step, we bought out the -- or took over the shares from the 2 founders who -- and that's very important, remain in their key roles in the organization. And for technical reasons, there was again split into 2 parts by the end of the year with 85.6%. But as of 1st of February, we have taken over 100% of net shares. And I think -- on the next slide, we can see and best explain the logic. So we, as Photon Energy had an asset-based business model where, of course, we're also providing a lot of services around the inception of these assets in the form of project development and engineering and the procurement of components and construction, but an important part of our business has been our own investments into [ phototac ] power plants, which we always investing with a view of holding them forever. So we are not unlike some of our peers in the business of creating those assets and selling them off, but we hold them for long-term ownership and through our name division and again, very specific services starting from Minting software and our control room all the way to specialized inverter services. We provide a very comprehensive package for keeping these assets operating at the highest possible generation level and for the longest possible plan. So that business model, of course, I think it was what relatively well. However, of course, what we have been seeing more and more in particular, as we have now over the last 2 years, embarked on our new strategy of new merchant strategy where we are selling the electricity generated by our power plants into the market. So in Australia, that is the spot market in in the CEE region, that's the ad market. Of course, we have entered into process where we have become and with an ongoing process, more savvy on how to use that electricity, how to get most of the our assets. And as I mentioned before, we have invested into left already some time ago. And in this -- over the last 2 years, we have been sharing a lot of ideas and formulated division, reflecting the reality in the market that in our business model, we have to forward integrate letter came from the other end. So the goal has always become -- well, ambitiously the largest asset-free utility in the world by managing efficiently the energy assets, but also the energy consumption of third parties based on software and services without actually deploying capital. I would say the catalyst for us, but also for net to see beyond our respective business models has definitely been the growing importance of energy storage, which on the asset side is in some countries becoming a requirement. So it will -- it is already very difficult -- in some countries is very difficult like Australia or it will be required very soon to integrate storage into renewable assets. and at the same time, left us business model of providing flexibility, providing balancing services is made a lot easier if you can -- if you also have energy storage assets in your mix. And if they're fully owned and fully controlled, it's becoming even better. So we've basically formulated our joint vision that if we bring our business models together, we actually become a truly fully integrated energy company that can meet the demands of a very wide range of customers. So through the demand-side response, all of a sudden the Polish TSO and very soon as the Cetera over time also the TSOs and the other countries where we operate, but also beyond as we are definitely in the process of analyzing opportunities in other countries. So these are and other flexibility services are in high demand, and that demand is going up as the share of renewals and energy mix is growing rapidly. At the same time, in many countries, the base load is being retired, whether that is nuclear or coal. So Besintegrade is becoming ever more complicated. So the demand for flexibility in ancillary services is going rapidly. And the demand side response is one of the most efficient answers to that and particularly the flexibility as it entails very little, if any, capital deproduct creating new generation capacity or building new power lines, first takes time and also require significant capital deployment, whereas DSR is a -- we have to use the grid that exists and the generation assets more efficiently. So this integration puts us at the forefront of developments in the energy market and provides us with a much wider range of activities, customers but also growth opportunities. And our teams are now working jointly very hard to identify all those opportunities. It's actually a long and growing list. But just to provide one example, our operations and maintenance services can, of course, be bundled for PV power plants can be bundled very nicely with market access and balancing services that -- let can provide in the markets where it has energy trading licenses. We can also use to a certain extent, solar power plants for ancillary services. So we can be -- we can provide much more comprehensive value-based propositions to existing customers, but also many new potential customers. And -- but we have -- so what we've done is we have created around left and our behind-the-meter activities, our new Energy division, which is focusing on providing large -- man large energy users. So we are talking about business to business, ranging from commercial energy users all the way to large industrial customers with a comprehensive suite of services. So -- the world has changed very significantly for energy users, particularly in Europe over the last 18 months with this very high level of price volatility, I mean and a very significant peaking prices during the third quarter last year to the point where many energy users have found themselves in a situation where they were not even able to contract electricity. And in the past, they were used to signing 1 or 2-year contracts at fixed prices. And during these periods of very high prices, many energy suppliers were not willing to sign these contracts even today is actually still very, very difficult. And so, they found themselves buying electricity in the day ahead market, which, of course, is a completely new experience. here, for us, the fact that we are in Australia, where, as I mentioned before, there's energy trading happens in a spot market where prices change every 5 minutes and a surprisingly large number of commercial and deep industrial energy users actually procures electricity in the spot market. These companies had to a customer sells to that. So to become what I would call smart about how they procure but also how they manage their energy needs. So on the back of this price development here in Central Europe, what we've seen is that as a first reaction starting actually from households all the way to large industrial users at this point, almost have to say an unlimited demand for installation of PV systems on roofs or next 2 factories. And we are increasing our capacities to meet that demand, which very often from our point of view, would be only the provision of EPC services. So building those installations, providing our operations and maintenance. However, in that -- in this journey from -- to be actually successful and maybe even create a competitive advantage for those energy users, it is important to go further. And that will definitely more and more include the addition of storage capacity to those TV systems that are being installed, which are to increase the flexibility when electricity is bought from the grid or certain services provided back to the grid. But of course, the next step is also to find ways how to make the energy demand, in general, flexible. So energy management services will become in high demand. And we want to present ourselves and as a partner for these energy users in this journey, so not only perceived because with solar installations, we are competing with solar installers who all they actually provide the installation of the solar system, and that's where it ends. But now with the combined capabilities, after the integration of Letta, we can actually help those customers develop a strategy and help them implement it. and really get them to a point where they are able to procure electricity at the lowest possible cost and on the back of an increase in the flexibility of energy consumption, but also then the download from the grid, we can sell flexibility back to the market, but also if there's -- particularly if there is a battery, if the battery is installed, we can also provide ancillary services to the grid so that energy is not only a cost factor, but can also provide revenues to those end users and significantly reduce the overall energy costs. So these are very exciting times, and we believe that we are now in a position where we can address and succeed as a still small and nimble player in this new market reality. And given the fact that we are on the ground in in 4 major markets in the CEE region. It's important to mention that we are also in the process of rolling it out in Australia. So we're in the process of obtaining energy trading license. We are developing the demand-side response, product and service for the Australian market. So we're also deploying this business model in Australia. And as time develops, particular as mechanisms for the procurement of flexibility and ancillary services. materializes across Europe, and we see that when there was the first auction of for flexibility in Spain recently with very attractive conditions for the providers of demand-side response services. This is a very dynamic time, but we see many energy markets. Some of them next to our core markets in the region, but also some further field, which may lead us to entering these markets with services based on the metropole of late, most likely initially in the form of the mental response, but then also additional services. And -- but we're not only looking at Europe and Australia, but we're also monitoring developments in other parts of the world. And this change in the energy mix, the demand for flexibility is rooting -- so on that basis, I would hand over to Clemens to run you through our financials and the outlook. And then as mentioned before, we'll be looking very much forward to your questions. We have received one. I hope we'll have more version on.

Thank you, Georg. Good morning from my side. I will walk you through now our financials for Q4 '22 and the preliminary numbers for the full year of '22. Let me just recap briefly what the main milestones that happened during this year that are reflected in our numbers. As we have presented in previous quarterly calls, we switched the majority of our portfolio to the merchant model, which mainly started with the Czech portfolio where we have the possibility to switch to from a feed-in tariff to a green bonus scheme, which allows us then to market electricity ourselves as we have done from 1st of January. And with the opportunity in the Hungarian market, we also switched our -- the majority of our Hungarian portfolio 43.5 megawatts to the merchant model also with the possibility for most of it to return to the existing feed-in tariffs after 1 year, which happened as of 1st of April. So this year, we can return if merchant prices would be below the feed-in tariff, which we cannot foresee for the time being out there. We have grown our portfolio a little last year by commissioning 1.4 megawatt in Hungary as well a merchant project, our second merchant project that was intended from day 1 or from the scratch when we developed it as a merchant project. On top of that, it's not that we have been lazy on that side, last year, we have built or started construction and basically finished also in Romania, 31.5 megawatts, which, as Georg mentioned just before, are under the commissioning process now. So we hope to have them added very soon to our portfolio, growing it from the 92 megawatts today to 123 megawatts very soon. We got research coverage last year, starting from UlsaResearch in Germany, would company the Czech Republic and Depopema in Poland, all of them, as we have seen before, giving bi-recommendation with consensus close to EUR 4 for our shares. So there is quite some head up in there. Coming back to the financing side. We have also seen some major milestones on our financing structure. We have refinanced our Czech portfolio last year, which was fully equity financed at that time where we could get EUR 28.1 million additional liquidity from that portfolio, we have tapped our green bond Generobond was issued in -- end of '21 originally by EUR 22.5 million in 2 steps to EUR 77.5 million. On the other side, we fully repaid our previous bond that we had outstanding, which was since 27 issued and was due on 27th of October 2022. So we have proven our track record with -- at that time, second bond issue that we had out there that was not fully repaid. On the business side in Australia, we also were quite successful by not only further developing our existing business there, but acquiring a very interesting 9.8 megawatt project, which is a hybrid project combined with 10 megawatt hours of solar of battery storage. This is for us not only from the Australian market, an interesting project, but especially going forward also for the European market where we can see also the importance of battery storage becoming increasing. We intend to start the construction of that project this year, mid of this year. And as Georg mentioned in much more detail already, the acquisition of Lara that is reflected in our financials. The acquisition has happened that we took over control and start consolidating Net as of the end of the year. So the impact on the P&L is basically 0, but you can see it really in our balance sheet, which I will show you in a second how that looks like now after the integration of [ Leeton ]. From the key performance indicators, as mentioned, our portfolio at the moment, it's 92.9 megawatts that is generating electricity. On top of that is this 31.5 megawatts, which are to be added in the upcoming weeks and months to this portfolio. majority of that and the new 31 megawatts will be clearly merchant-oriented. So you can see from the 92 megawatts, 76 almost are already merchant exposed. -- only 16 megawatts have aid in tariffs still. This portfolio generated last year, 121.6 gigawatt hours of electricity, a growth of 17% or almost 18% in output. A majority of that is merchant oriented since we only switched in April, you can expect that from that even this year, more will be merchant-oriented, harvesting the high electricity prices, which you can see in the right bottom born corner that we have had last year quite significant increase in average revenue per unit because of this merchant model in the Czech Republic is EUR 805 -- on average, this is the green bonus included there. So this is some 500 almost EUR 590 is to green bonus domestic electricity price in Hungary, we harvested EUR 288 on average and in Australia, EUR 107. In the remaining feed-in tariff parts, you can see the much lower prices in Hungary with EUR 94 compared to the EUR 288 in. In Slovakia, we have the EUR 260 feeding tariff, which is running there until 2030. And that's, yes, roughly what goes then into our revenues. And this, I'm very happy today to present you those figures because not only Q4 was a record year for a record quarter for us, SA last quarter in a year. But this ended also the full year as a truly record year for Photon Energy with total revenues for the full year being EUR 94 million compared to EUR 36.4 million a year ago, so a significant growth by almost 160%, 2.5x the revenue. In Q4 only, we could grow from EUR 11.7 million to EUR 26.4 million, also a significant growth of 125%. As you can see, electricity generation is a significant part of these revenues. However, becoming a smaller part of that overall revenue mix in our company. So from the 94 full year revenues, EUR 35.2 million from electricity generation compared to EUR 19.4 million a year before. So growth still of 82%. As you could see before, 18% of that is additional gigawatt hours produced. The rest is our merchant model and the decision to switch the merchant model, generating much higher average revenue per unit. We can see the same effect in Q4 where we even had lower energy production compared to the previous year. Nevertheless, due to the higher average revenues, we could grow our overall revenues to -- from EUR 3 million to EUR 3.8 million. So also here, 27% growth. All that goes through to our EBITDA, where we had a -- for the full year, a record EBIT of EUR 24 million. Here, we have basically fulfilled our guidance that we gave actually our revised guidance because regionally, our guidance was that you come in with some EUR 18 million. We have upgraded that to EUR 24 million and delivered those EUR 24 million. a growth of 151% for the full year compared to last year '21. If we look into the fourth quarter, also there, a growth of 17.3% from EUR 1 million to EUR 1.2 million. Here again, important to mention that there is certain seasonality in our business. As you might know that Q1, Q4, we still have in the electricity generation, much less than in Q2 and Q3 here in the Northern Hemisphere. This is a little compensated by our Australian business. We can see with the other revenue streams that account more and more in our revenue mix that also the seasonality will be compensated more and more -- we can see, for example, in the demand response from relative where we can see in Q1 and Q4, more revenues to be generated as an other activities like trading, EPC and especially also the O&M that there is not such a strong seasonality. But coming back to the overall numbers as such, the significantly growing EBITDA is also then going down to EBIT, even though we had some increased depreciation clearly from additional assets coming in India for the full year, be coming with EUR 14.5 million after a negative EBIT last year, still of $700,000. So a significant not only a turnaround, but a significant growth. Even in Q4, which was negative in 2021. We still have a negative EBIT of minus EUR 355 million. Nevertheless, it improved in this half the -- almost half the amount from the previous quarter. The whole line goes down to net profit. This I think is the also important message that we have been asked very often in the past of when we turn around and return positive. So this is after tax profit of the full year of EUR 2.8 million. We are there coming from minus EUR 6.4 million a year ago. And then just to bottom line total comprehensive income. As you know, we have, on the one side, revaluation of our power plants that we built ourselves, which is reflected in there. This was this year very minor because of only connecting 1.4 megawatts in Hungary. There is also some foreign currency translation differences India, which were unfortunately this year, negative. Last year, they were quite positive. -- to the development of the foreign into Chevron, mainly. And then we have there as well our derivatives that we have on our financing, which have -- you see a very positive value as well so that we come in with a total comprehensive income of EUR 4.3 million almost compared to EUR 2.1 million a year ago. And that number goes directly into our equity where I will go directly then to the balance sheet and see the changes there. As you can see, our balance sheet has grown quite significantly from EUR 200 million or EUR 197 million a year ago to EUR 240 million, so by more than 20% overall asset base. As mentioned, there is reflected in the on the ones in our organic growth from a power plant. So you can see mainly on the fixed assets. which have grown by the assets in progress in Romania, mainly by EUR 24.7 million. On top of that, we also realized by the acquisition of Leta intangible assets for the values that are in the company there, mainly attributable to the demand side response and the licenses that the company has in all the markets where we are active to trading licenses, which are reflected in there so that our fixed assets are growing from EUR 142.5 million to EUR 171.5 million. Our current assets have also grown quite significantly from EUR 14.8 million in iota's mainly related to our procurement strategy. We have grown our inventory quite a bit on the one side, procuring component for the trading activity, which has grown significantly in revenues this year and is also foreseen or last year and is foreseen for 2023 to continue to grow quite a bit. And we also -- we also have secured already capacity for our own portfolio where we have roughly almost 10 megawatts of capacity, the components secured already and on stock so that we can roll them out this year without any dependencies on the supply chain. That's on the active side and the passive side, our liabilities have grown as well. As I mentioned, we have refinanced not only our green bond but also our Czech portfolio long term. Those 2 effects led our long-term liabilities, noncurrent liabilities grow from EUR 111 million to EUR 150 million. And on the other side, our short-term liabilities went down a little. That is on the one side that we have fully repaid our previous bond from 2017 to 25 '22 that was out there that we repaid on 27th of October fully on the other side, that number increased a little by -- we also have a very small or very small Czech crown bond outstanding, which is due this year on the 13th of December, that we have about EUR 3.1 million, which has been reclassified from long-term liability to short term because it's due within 12 months. That brings me to the basically gap between liabilities and assets, our equity. That could be grown quite significantly from EUR 51.5 million to EUR 60.5 million, growth by 17%. That is mainly attributable to our positive results, the total comprehensive income. And on the other side, also to the treasury shares we have issued, which we had basically on stock, which we have issued for the transaction for this Leta to acquire the company. is the balance sheet. In the Current assets, we also have our liquid assets, which went down a little. I will explain you this best on the cash flow statement. Our cash flow statement is from the operating result. We had a very positive operating result, as you can see from the income statement with the EBITDA. Nevertheless, there were, as mentioned already from increase of inventory and with the growth of the business, also receivables, payables that we can see that there was a negative working capital effect that is decreasing the overall operating cash flow to EUR 3.7 million, but still quite substantial positive number. We have been heavily investing in those projects in Romania mainly, but also the acquisition of Delta is reflected in the investment cash flow now, and that number is then compensated by some net effect on the financing activities, as mentioned on the Czech portfolio on the one side, plus we had some repayments, regular and early repayments in Hungary, plus we had the full repayment of our Eurobond, the old Eurobond there that we are coming in at the end of the year with pure cash that is without restricted cash and without the other liquid assets that we have of EUR 11.3 million as of the end of this -- of last year. Yes, this is roughly the overall picture of our cash flow, and this brings us anything to the outlook for this year and I hand over to Georg, maybe to talk about our guidance for 2020.

Yes. -- and as I present or discuss the outlook, this should also answer one of the questions on what basis this forecast has been prepared. So our -- the guidance we published yesterday is that we plan to grow revenues from EUR 9.2 million to EUR 150 million and to grow our EBITDA from the EUR 24 million this year to EUR 29 million. Actually, the question I think that has been placed, which is asking for the basis and what the energy market prices we have been assuming indicates there is, of course, as we are I think as we are planning and as we are -- as we also setting the parameters of this guidance, there is a lot of moving parts. And energy prices are one of them. Clearly, there's -- where we can take certain guidance from -- and I mean, what we do is we take guidance from the futures market on the EX for the 2-year pricing curve, which, of course, also changes every day, and these expectations have -- I mean this curve has been falling since the high in August last year, even since the beginning of this year, we've seen a reduction in that expectation. But of course, in addition, we also had the price caps and other equity measures taken in the various countries. So there's a lot of a lot of molding items. And then I would say there's definitely not been an easy exercise and also more difficult than last year where we came with a guidance of original EUR 18 million and prices, market prices went significantly higher than what we initially anticipated. We adjusted upwards and basically hit that forecast. I think I would also like to add that in the fourth quarter the results, I mean, both in terms of revenues, but also EBITDA and all the way to the bottom line. we were actually expecting to be to miss better, but in the fourth quarter. Energy prices, particularly compared to the third quarter had come down very significantly at lower production volumes. So then -- so below the forecast. So it's not only sensitive to prices, but also the volumes had we had the expected volume, the numbers for the flat looked significantly better. But coming -- so forward-looking, electricity generation revenues and the EBITDA they generate are, of course, the starting line for our outlook. There we are adding new capacity shortly, plus beyond the 31.5% that we are in the process of commissioning in Romania. We are planning to build more megawatts and more power plants in Romania later this year, plus we expect also some different additions of capacity in some of the other markets. So the -- as opposed to last year where the generation capacity grew only marginally this year, there will be a significant increase in installed capacity that will drive this. And even if average selling price ends up being lower than what we had last year, that should be -- we would hope more than made up, but at least compensated by the increased capacity. Then secondly, the green bonus in -- that we received in the Czech Republic is -- I mean, for this year was somewhat lower than the year before. However, it is still a very significant number, and it's not related to the dependent of the current market price level. And also in Slovakia, we are still on the feed-in tariff. So there's been basically no change. So yes, forecasting revenues for generation are -- have been difficult. We've tried to be, as usual, reasonable and conservative. But of course, there are some like scenarios where they could be lower, but we also see certain upside. And actually, just reading the news the last couple of days, there is -- this is a very dry winter. So they are already our concerns growing that hydro may not be providing as much electricity as usually, at the end of the first and beginning of the second quarter, during the spring. And at these low water levels may also have an impact on generation from nuclear and coal-fired assets as has been the case last year in France, where famously, but also in Poland, actually, for the last couple of years already, there have been impacts on coal-fired generation. So we will see -- we are comfortable that based on the current price levels in the forward curve on energy generation, we could -- we have a solid base case. But a lot of the growth will, of course, come from other business lines. So last year, we had a very significant increase, a fivefold increase in revenues from technology. And thanks to the composition of the of our merchandise. We also managed to increase our gross margin, and we expect it to continue. So while we don't expect a fivefold increase in the business volume of technology in terms of group external sales, we still see quite a bit of upside and a significant contribution to group EBITDA. And what we expect is here is to see various development in the provision of EPC services for external parties. And that will span across -- behind the meter installations, so basically rooftops all the way to utility-scale project. So that's from a very, very small base across the group. And actually, most of those revenues last year were generated in Australia. We expect that number both in terms of revenues and profit contribution to be at a fundamentally different level. And then, of course, we have the revenues that are and contribution margins driven by the Leta. So clearly, the capacity market where -- and this is public knowledge, the expected revenues or the contracted revenues for demand-side responder services in the Polish market. account for almost EUR 8 million, EUR 8 million, EUR 7.7 million and with a very healthy contribution margin. So that is, of course, a significant improvement also against what I had last year. And then we have electricity trading, which has been developing just developing quite dynamically. And it's also an area, and I think it's also important to note our business lines generate different types of revenues and with different value different because they have different margins. So in electricity generation, EBITDA margin is 90% and more in most cases, whereas on electricity treating the margin, for example, the margins are very, very small and rather percentage points at the moment as also in the Polish and Romanian markets, those margins are actually capped at a very low level. That's, for example, not the case in Hungary. But then, for example, on providing the balancing services, and we are very happy with how well our forecasting is working. So the margins at the moment are also very healthy. Then we have the trading of components where last year, we managed to be a technology where we've been able to generate gross margins materially above 10%. But it's -- of course, it's a different revenue stream than [indiscernible]. So this EUR 150 million is composed of many, many different types of revenues in O&M to earn EUR 1 million in revenues. There's a lot of people putting in a lot of effort and a lot of work in electricity trading. You can theoretically do a turnover EUR 1 million by buying and selling in with one misclick. So which is, of course, not something we have both in not, but it's just to show that actually, the revenues, we really need to look at a different type. So is a number that we feel comfortable with. What is, of course, important is the EBITDA. And there, we expect to compensate any impact of lower energy prices compared to last year with higher generation. We believe that particularly now with this weather pattern that enterprise across the year may actually be higher than what is indicated at the moment, but that will provide a positive surprise, but it's mainly about new capacity being added and more significant contributions from other business lines. And of course, those that have a part of our group through the integration of that. So we are comfortable with these numbers. But as we are preparing this guidance, it was a bit more difficult than last year. Maybe also just one more to add here. When we talk so specific about electricity prices, the electricity revenues are accounting or have accounted in 2022 for about 37% of our overall revenue in the forecasting is EUR 150 million. That percentage will go down. So as the importance of this revenue stream. I mean not about EBITDA, it is contributing a lot, but on the revenue part is also getting less and less and other revenues like the business from Leta, which is adding there will become more important, plus our technology trading as well. We'll add more and more to this revenue mix. Good. Well, there's a follow-up question whether we can be more specific on our target for '23 in terms of new capacity installed. Well, we have -- we've published a guidance target for the end of 2024. So at this point in this forum, we cannot be more specific in relation to this year. But I think when you look at our -- in this presentation, but for example, to month report, by the way, one for January will be published after business on us today. And you look, for example, at our Romanian pipeline and at the stages, it will -- do we have a different here. Sorry, I have it in the No. So there is a significant additional significant additional volume of projects that are at an advanced stage -- and we will be -- I think this metric can say is that we will start construction of the next batch of power plants at the beginning of the second quarter. We -- and I think what we should also mention is that with the publication of the annual report, which will be in April, we are planning to update our medium-term guidance, which at the moment is for year-end '24. And there, I believe we can be -- and we will be more specific in relation to installed capacities. What we can say is that the remaining market is new to us. It's actually a market that has now opened up from an ADR freeze. And is also a market with a surprisingly large amount of red tape. So in combination -- this in combination with supply chain issues generally last year, particularly related to transformers and so on. We have picked up a bit of a delay against the original plans, but the upside of this is that we have managed to fine-tune our processes of our supply chains in the Romanian market. So with the next batch. And as we continue adding capacity there in the next quarters and years, we believe that things will go a lot faster. And secondly, this year and next, at the very least, Romania will be probably one of the most red hot PV markets in Europe because of a lot of pent-up demand, and we are getting -- so the experience that we have gained, we believe would allow us to grow very dynamically in the provision of EPC services to third parties and the extent cost to utility scale, where we will be a lot of -- at the moment, we are also perceived as one of the first a player to commission a large number of assets. So we see a lot of other investors coming to us and so we can win some EPC business there. But also for behind-the-meter installations, Romania has probably what is at the moment, the best framework in Europe, so up to 400 kilowatt peak. -- a rooftop installation does not require a construction permit -- and if the energy user has at least 400 kilowatts of capacity on the download, they can also build up to 400 kilowatts. So basically, 400-kilowatt rooftop installations can be built without minimum paperwork, and they can benefit from a net metering mechanism. So something that was used in other markets some time ago and helped drive PV very dynamically like in Poland, actually, about a year ago, that was changed to net billing. So that has helped in other markets now is available in Romania. So this is an amazing window of opportunity and the demand for rooftop installations is quite hot. So Romania is a market where we expect a lot of activity, and we have been and we continue building up our capacities to serve this demand beyond our own rollout of plants that end up in our portfolio. So maybe let's go through the additional questions... So maybe let's -- because one of the questions. So maybe let's address them one by one. It's all about expectations from Tartas outside Poland. So -- so first of all, this year, this 134 megawatts of DSR are creating a situation at let will contribute positively to our group results at the EBITDA level. And as I mentioned at the beginning of the presentation, the next thing for us to -- that we're focusing on is the auction -- the additional action for next year, where the goal is to grow market share and to win at least 300 megawatts of contracts for next year. The demand by the TSO polishers there. So then the question will only be at what price this will be contracted. So that will be a significant growth for next year. But we have as we have the new Energy division, which is laptops or behind the meter and we are building up capacity in particular to address this demand behind the meter. So with simple ranging from pure and simply EPC, all the way to complex services, including energy trading, energy supply and the monetization of flexibility. So this is something that's ongoing and our pipelines of behind-the-meter projects or new energy division opportunities is growing very dynamically in Poland, but also in the other markets where -- and this is -- this was the nice thing about this integration process with Letwin strategically actually in terms of market focus started some time ago that we have footprints that we are able to combine very, very quickly and teams to combine very quickly. So clearly, in all the markets, Poland, Czech Republic, Hungary and Romania, in particular, as I mentioned before, there's a lot of opportunities. So from that point of view, Leta is definitely going to contribute very significantly also outside Poland. And with respect to, as mentioned before, in terms of TSR, I wouldn't want to say that the world is our oyster, but we do see a lot of markets opening up, introducing market mechanisms that whether virtual power plant can be used very, very effectively with very little additional investments. So in terms of software, very little. But for example, we wanted to enter the Spanish DSR market, we would, of course, have to set up an office and have a few sales people. But it's -- but we don't have -- we're not a start-up that has to first invent the software, we can just leverage what we have. I think there was a question also in relation to storage capabilities. So our clients -- so first of all, we have experience and a track record in relation to storage in Australia. And actually, just a follow-up question includes that. So we have built our first hybrid project back in 2014 in New South Wales, which to this day powers the radio tenor and has been working and continues working. Then we had our project in Lowther Island with 1.3 megawatts of PV and 3 megawatt hours of storage, which we integrated into the island power grid and pellet up with their diesel gen sets. And we also acquired this project in placed Bogari. -- those 3 NIMs are sometimes funny. And this project we bought from a developer developed as a bid project. So the parameters are that grid connection is just below 5 megawatts AC. That is important because that keeps us outside the bracket of so-called scheduled generators. So we can basically sell into the spot market very easily above 5 megawatts. It gets very complicated. And at the moment, our plan is to install up to 9.8 megawatt hours -- sorry, megawatt peak of capacity on trackers. So by design, very similar to what we built in [indiscernible] just with an even higher overbuild ratio. And we're planning to install 10 megawatt hours, may end up being even more. So that's not a question of sizing, which is driven by the market potential. And most likely, this will be a quarter probably be an easy couple of settings so that we can actually sell which will otherwise be the clinic losses if we had an AC-coupled solution. But the final sizing will be a function of the revenue model. And this actually leads to a key question that is also relevant in Central Europe. So -- and also to the question of storage capabilities. So storage capabilities is clearly that has an engineering dimension, where we have people that we are also looking at expanding our team there. But what is becoming -- but that is just part of the solution or part of the issue. The other issue is that the regulatory frameworks in different countries in relation to storage, whether it's in a hybrid setting or behind the meter or utility scale or stand-alone are different and the changes are quite dynamic. So just staying on top of what is possible in each market and what services, for example, can be provided is already quite a bit of what that has -- there was an impact on the engineering solution, which may have an impact on the development of this project in the permitting. But what comes on top is then, of course, the business model. And I mean, as a general rule, and this is as I mentioned also today already, very much at the core of our joint vision with the founders of let that storage is, of course, the game changer. But it is in a grid connected situation. So as opposed to, for example, [ Laday ], which is a remote island that has its own grid, but -- and on the -- now 2 power sources. So in the grid connected setting, today, using batteries only for low shifting is not enough. So that will not provide an adequate return. If we had a start using the battery for arbitrage in the market, it makes the situation better, but it's typically also not enough. So in order to really get the maximum out of battery investment and to make it viable, you need to be able to have a very -- the widest possible revenue stack and it means revenue streams from -- and what typically gets it across the line is if you can provide flexibility and support, for example, balancing for a larger portfolio, if you can provide -- and then if you can provide ancillary services to the grid. And that typically gets it across the line. So -- but also that means you need just people who don't understand the technical side and the regulatory but also the financial. And we're working on our own models, but also in certain situations with outside advisers and consultants to properly defined and evaluate the creative business cases for investment in storage. But it's definitely the direction of travel. By having added the capabilities of left, we are in a much better position to evaluate. But also what is at least as important is to execute, it means to really then sell those ancillary services, for example, in those markets where it's possible and actually realize those revenues. So just one thing to have a business plan that says, look, these are the revenue streams, but when you still have to have a partner or the capability to realize those. And this is where we are today. So storage will definitely become a massive topic, and we are increasing our capabilities, which technical but also regulatory and financial. And I think that -- and in our review of our medium-term targets, there will be a lot more language and details about our plans in relation to energy storage.

Okay. The next question is about financing and about the bond. And if it's not along with reliant financing through admission of bonds in the amount of EUR 77.5 million is not too much already. I mean one thing is we are very carefully in generally in our indebtedness. Therefore, we have also given for the bond covenant that the adjusted equity ratio consolidated for the group shall not go below 25%. So we stick to that very clearly in the whole financing mix basically. As you might know, our financing sources so far have been purely the bonds that we have issued on the one side, on the other side, the long-term nonrecourse project financing of our power plants and this mix together shall be not more than 75%. At the moment, we are at 29% equity ratio, Soweate 71% indebtedness ratio from that point of view. The amount as such. So I mean, we see the bond financing as a -- at the moment for investors attractive opportunity, but also for us. So going continuing with bond financing as such is part of our financing strategy. For sure, we carefully monitor the absolute amount because of the bullet risk, so to say, on the mine for repayment. We see some head space there still generally in our -- with our expected growth on the one side. On the other side, we clearly evaluate also to split this in different bonds with different durations in the future as well. So this the first, the other question, then there was also one more about Australia. As Justin Georg has mentioned, is already very detailed. I also mentioned before, just to reiterate that we expect that project with to 9.8 megawatts that you can see in our pipeline and the 10 megawatt hour storage to be constructed, built this year still in Australia, Middle of this year, that we start construction. And could you be so in beta you want to add something or to the next question. Well, I think on the question about the bonds. So the bonds are an important part of our financing mix. And I think what is important, I wish to stress it again, is that in the second half of last year, we made sure that all the financial debt that we have in the group. So that is at the level of the project, but definitions he bond because it's a fixed coupon bond, they are all fully fixed, fully hedged in terms of interest rates. And given the inflation environment, when we look at our cost of debt, I think we are at a level that is reasonably comfortable. Inflation rates are significantly higher. I mean, our expectation maybe less tight less sanguine than some market participants have believed that this inflation will stay higher for extended periods of time. So in such a situation, that is not bad. And particularly if we -- through our merchant strategy, we can benefit from the price development environment. Of course, it needs to be managed. We have very strict covenants in the bonds also to which we adhere and we'll try to keep the buffer. But it's not something -- clearly, we'll also look at the maturity structure going forward. But we have invested a lot of time and insert into our position on the bond market, and we believe that after essentially 10 years, we have built up a very good reputation. And given that our banks on traded on par, a 6.5% yield to maturity for an unsecured bond actually implies quite a high level of confidence into for the energy as an issuer by the market. So I think this is -- this is quite a good situation and position to be in. And this is why clearly the bond market will remain an important part of our energy mix and just increases our level of flexibility as we mostly rely on project level financing and the bond market. So yes, that's -- and so can to the next, it's a question related to essentially the lockup of the founders and of letter. Well, because we don't want to develop shareholder details of the transaction. But I mean, there is -- and I think the language we used is that there has been a lot of applied. There is -- I think, so much we can say there is a performance test that relates to the year 2025. And the numbers, the results of the new Energy division in 2025, which will be known in 2026 are quite important. And until then, the -- there's a significant lockup mechanism in place. I think this is so much we can say. But also what we would like to say is that -- and I think that the 2 founders who remain instrumental in the business line, I think share our long-term view. And so it's not one of the situations where a company gets bought and founders want to lead as quickly as possible. But -- and they have taken a very significant and highly above average share of the compensation in total energy stocks. So that just shows that this is a long-term ambition and a long-term approach. There's maybe a question related to the... To the -- well, first of all, EBITDA and net income margins did not follow revenue growth, especially in Q4 '22. Yes, that is -- but I think we have already explained a little before. It's very much attributable to the revenue mix. So we have in Q3 a very low high EBITDA revenues from our electricity generation with extreme high EBITDA margin, as Georg mentioned before, up to 90% on the other side. And also, if you look at the overall numbers for the full year, compared this with last year, you can see that this revenue mix more and more revenues are coming proportionally from other services like technology sales with lower margin like engineering business, which has also lower margin than the electricity generation, but also it's not that capital intensive, also I have to mention all the time here. So this is the explanation for that. Regarding the let acquisition, the intangibles are depreciated. This will start this year basically over lifetime of the underlying, how to say, business, which is either, as I mentioned before, this is the capacity market. This is the contracts that we have there included and on the other side, on the trading, it's between the different trading licenses. So this will be starting as of January this year to be reflected in our depreciation. And then I think we have... Olean.

Yes. So there's 2 more questions. One is whether we have any plans participate in the returning of the Ukraine electricity generation. Well, I mean, the situation is as it is. And I think at the moment, the conditions to safely enter that market are not there, at least for a company like ours. On the other hand, in our utility scale is, we have very deep colleagues with a very deep understanding of the market and should the conditions improve to the point where this is -- from all points of view, not economical, technically and also from a safety point of view, a rational thing to do. That means to address the market and look for opportunities, we remain open to do so. But I think for that, we needed to see a significant change to the status quo in terms of what is unfortunately going on in Ukraine. So definitely not in the short term, and it's not like we have cumulative border waiting for I mean there's a lot of issues, but we have an understanding of the market. And if the opportunity is there, we will definitely look at it.

Sorry I forgot to you can just see now that with the amortization is also a question regarding taxes in Q4. Yes, we have, I mean, generally and in this year was extremely profitable year, as you could see. So our projects, our SPVs in the past generated profits, but now with the merchant model much more. So there is a higher tax burden coming from that side from this high income, plus we also this especially in Q4, the construction business that we do and also when we build our own power plants, this is arm's-length. -- o our EPC earns money. By doing so, so there is also high profits coming from that side. This is why, overall, for the full year, then the profit -- the tax burden is much higher compared to last year. Okay. And the last question is state of affairs of our 3-megawatt big region project. So before I get to that, I think we can provide an update on the pilot project of agent in car work. So the generation part has been operational and supplying great already for a few months. And based on our current information, the entire system, that means including the storage element and the OSC engine that generates electricity from the heat difference should be ready and soon. And at the moment, we expect that in March, there could be the commercial operation commenced of the entire system. So which is very important because, of course, a functioning demonstration unit is something that is also crucial for our own efforts to finance the project. So that is coming there were already very close. And in terms of permitting at the moment, nothing has changed that would lead us to change our previous announcement or guidance that -- or expectation that we hope to be technically ready to build a means of all the permits by the end of this year. And -- but as soon as we have the cargo is ready to be ready to operate or it would be operational, that's when we want to start in earnest, the effort to put together the financing package, both in terms of what may be really in the form of some Australian subsidies, equity and debt.

And of course, when we can take equity and that provide us the functioning power plant and Solana works that exercise will be a lot easier. We have for the selected financial adviser to help us -- so basically, we're now waiting for this commercial operation of the Cabo project, which, just as a reminder, is 4 megawatts of generation capacity, 3 megawatts of grid capacity and 50 megawatts of storage...

Good. And we are through if there is no more questions, little -- we ran over time a little. Thank you very much for your time.

We, of course -- we are available for follow-up questions by e-mail. So please hand them to IR or to an outcome. And we're looking forward to months. In 3 months in the next quarter call, which will be around this time in 3 months. Thank you very much. Thank you very much. Bye. Good day.