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

Good morning, ladies and gentlemen. It's my pleasure to welcome you to the 2023 half year earnings call of Photon Energy. My name is Georg Hotar. I'm the CEO and interim CFO of the Photon Energy Group. And to my left and to the right of your screen is Michael Gartner. The other co-founder of Photon Energy 15 years ago and has been running -- building up and running our Australian business for the last -- more than 10 years and he's also Group CTO. So I will run you through our presentation, and at the end, there will be opportunity to ask questions, so highly welcome. So today, we'll do a very brief introduction, as we assume that most of you know our company of the Photon Energy Group and a few updates on key numbers. We'll be discussing the business development in the first half. I'll run you through the financial results, both for the first half year and the second quarter. And we discussing about the outlook for the rest of the year before we get to the Q&A session. So just very quickly, we have been in business since 2008. Our headquarters are in Amsterdam. We have activities in over 10 countries. We have grown in terms of head count very dynamically in the last couple of years, now exceeding 330. And obviously, a public listed company. Our shares are trading on the regulated markets of the Stock Exchanges and the open market of the Frankfurt Stock Exchange and our shares also trading system. We are currently covered by 4 research houses and across the focus areas of the Czech, Polish and German capital markets. A very important quarter, part of what we do and how we do it is ESG. And here, it is important to point out that we are as an issuer rated by imug rating, a leading German ESG rating agency with the result of very good. This is a rating that has been renewed, already confirmed after -- 2 years after the initial rating, where we also managed to improve our rating from 75 to 76 out of 100 possible points. In terms of our business lines, a few headline numbers. We currently have a project development pipeline exceeding 1.2 gigawatts. We have to date constructed also 140 megawatts, the vast majority of that for own portfolio, which currently stands at 113.1 megawatts peak of generation capacity with another 30 megawatts in various phases of construction. In 2022, we generated over 120 gigawatt hours of electricity and expect to grow that number this year. A very important part of our business model is on the provision of operations and maintenance services, both for our own power plants but also to also for external customers. And here, we are happy to report that in the last 2, 3 quarters, we have seen a very encouraging acceleration in signing up new customers. So we have exceeded the 500-megawatt mark. So now we stand at 540 and in this business line, which is very important and strategic for us, we expect that growth to continue growing and continue improving. Through acquisitions of Lerta, we have entered the energy trading and flexibility aggregation business, all enabled by a virtual power plant software. And at the moment, we have 290 megawatts of capacity, both on the supply and the demand side are connected. And one of the highlights of the first half year is as well that we have been able to expand our presence in the Polish capacity market by succeeding in the additional option for the demand side response flexibility services to the Polish transmission system operator, where next year, we will have 389 megawatts contracted. And we'll also touch today upon what we consider to be a key activity in our water business line, which is our remediation technology with a particular focus on the remediation of groundwater and soil contaminated by PFAS chemicals. In terms of our footprint, we are active and on the ground in our 5 core countries. In the CEE region, which are Poland, the Czech Republic, Slovakia, Hungary and Romania, which currently keeps us most busy as that's where we are focusing our investment activities for the expansion of our generation portfolio and the second market is ready for more than 10 years, has been Australia. And as you can see, we also have activities and customers outside that footprint area. So for specific services, we have customers essentially all across the continent. So the key points and highlights of the first half year of 2023 for us related, of course, to electricity generation as this is the most important revenue streams in terms of the bottom line impact as electricity generation segment provides us with the highest EBITDA margins. And here, the first half of this year has not been very joyful as we were hit by a combination of -- and our results were impacted by a combination of 3 main factors. One of them is that we have suffered a delay in getting our first batch of PV power plants that we essentially managed to complete in terms of construction and get them ready to connect at the end of last year or the beginning of this year. However, due to many local circumstances related to the commissioning process, we have experienced significant delays. At this point in time, or by the end of the reporting period, we had 6 out of our 8 power plants commissioned connected to the grid, injecting electricity, generating revenues. We have connected the seventh a few days ago and are hoping to connect the last remaining power plant in the next few weeks. At the same time, we have started construction of our next batch of -- in total 9 power plants. So this delay in getting generation capacity online has had an impact in terms of the volume. The not so favorable weather conditions across our existing portfolio has further had a negative impact on the volumes. So in total, the volume that we have been able to inject into the grid and sell has remained almost unchanged, actually with a 0.9% year-on-year reduction. And that is like-for-like, that means -- just looking at the existing portfolio, a shortfall of 15.6% against our expectations based on energy forecast. And on top of that, we have seen a material decline in average selling prices. So after a very situation in terms of energy prices, last year, we have seen the pendulum swing into the other direction, this year and essentially over the last 3 quarters, where energy prices have declined significantly. I think we have an opportunity to discuss about the outlook and expectations a little bit later. Nevertheless, despite the delays, we have managed to connect 5.7 megawatts already in the first quarter, another 15.5% in the second, and we currently stand at 107.1 megawatt peak. Actually, it's 116, including the one that we just connected. In terms of new power plants, we have currently out of the -- so the next batch is 9 power plants with a total installed capacity of 38.6 megawatts. So a little bit more than half of that is under construction already. The remaining 18.5 are at the ready-to-build stage in terms of permitting and we will commence construction in the next couple of weeks. So it's basically a program will roll out and try to optimize across 9 online projects. As I mentioned before, we have seen very dynamic growth in signing up new O&M customers. So in the first half of this year, we've grown our customer base by 158 megawatts, which given the number at the beginning of the year is substantial growth. And here, we really see very strong momentum and our regional footprint and the quality we provide to external customers as well as the ability to bundle O&M services with other services like market access and balancing services. And in the case of Poland, also the generation of additional revenues to the generators to the capacity market is driving this growth. So there we are really looking forward to the next couple of quarters. We have expanded the project pipeline to over 1 gigawatt. And we'll get to that in a second. And what we can -- there's also been a very positive development in the first half of the year is an acceleration that we see continuing in EPC services we're providing to our commercial industrial customers. That means these are solar installations, most of them on the roof generating electricity for on-site consumption for large energy users. So this is very dynamically growing in Australia, and we also expect a similar dynamic over the next couple of quarters in our European markets. So on generation results, I discussed are the lower volumes, the lower prices in the first half have been to the tune of 28%. So last year, in the first half, we had EUR 245 million, now we're at EUR 176 million. Here it is important to note that actually the shortfall from the segment coming from the market has been more significant as the Czech portfolio also benefits from a subsidy in the form of the so-called green bonus. So when you look at the realized revenues, you see a very high number of EUR 655 million in the Czech Republic. So a significant part of the mid-last majority of that is actually the element of subsidy which has more or less remained unchanged between '23 and '24. So the decline has been essentially larger, we still have some additional other power plants in the feeding territory regime, like in Slovakia. We have a few still left in Hungary. But as you can see, the share of generation capacity in the selling electricity into the day ahead market. In the case of Australia, the spot market on a merchant basis has grown year-on-year and essentially of our capacity is not merchant. It's important to note that in the case of Hungary, we have the option to return to the feed-in tariff scheme for most of our power plants that exited and became merchant at any point in time. However, for the time being, this is -- we're not prepared or not actively considering using that option to return, but it is available for extended period of time -- periods of time. On the generation assets in the portfolio. So we discussed the expansion that we have had in the first quarter, we still expect to commission not only the last power plant from our second batch, but is a bit of luck and improved processes also on the side of the distribution companies that are connecting our power plants, we still expect additional growth in our portfolio, driven by the Romanian market until the end of the year. And -- but the whole 38.5 means still 20 that we have under construction, the 18.5 will start. Most of that generation capacity should come online towards the end of the first quarter next year or in Q2. In terms of our project pipeline, you can see that the -- there's been an addition in Australia, which we'll discuss in a second. But in general, what we're obviously observing the energy markets very closely, not only in terms of total price levels, but also the pricing structure in today and what has become very apparent, particularly over the last couple of weeks is that the growing share of renewables and in particular, solar is turning the pricing curve into changing in very dramatic ways. So at times when solar generation is high, electricity prices have been very close to 0, particularly on weekends, but in some cases, even during the week. And also, we've had a grown number of hours with negative prices. So the message of that is that -- we have -- essentially, we've decided to execute a period in our development strategy. And where we'll focus less on maximizing the installed capacity in our portfolio on pure solar project but we see the direction of travel in the future in hybrid projects in combining PV generation and energy storage or all the way pure energy storage projects. And here, I would like to point out that our project in Australia in Boggabri that we acquired in -- at the end of last year is now coming close to execution, which would be our first hybrid project combining solar generation and energy storage. And this is going to be a blueprint for what we do in Europe. And so at the moment, we are going through an exercise where we look at our project pipelines across the market where we can switch the ongoing development towards hybrid. We are also already developing opportunities for storage only, particularly in Poland. We are looking definitely all our new developments that will start from here -- from now on will be hybrid or storage only. And at the same time, we are -- while we will continue building solar only projects on the basis of the most mature end of our pipeline at the moment in the short term, mostly in Romania, we are also looking and considering the options to monetize some of our pipelines over the next couple of months and redirect resources to this new type of development. And of course, when we speak about energy generation and storage, our investment in region comes into play. And here, we have made some good progress on the permitting of Yadnarie based on the geotechnical studies that we conducted, we have decided to downsize the project from the region of 300 megawatts to 200 megawatts also with a lower grid capacity of [ 115 ] megawatts instead of [ 150 ]. But in terms of permitting, we're making good progress. At the same time, RayGen itself, is making -- has made very strong progress in completing its first pilot project in Carwarp, Victoria, where there's an official event scheduled for games this month, which then should prove that this technology is working both in terms of generation but also energy storage. And important step for us is that we have a couple of months ago, commenced looking for additional locations, potential occasions for the RayGen solution and given the stage we've reached, we have added 4 new projects with a total [ current ] plant capacity of 455 megawatts into the feasibility bracket in our pipeline reporting. And Michael, if you may want to add some.

No, I think you've covered that one-off. I mean it's a very important part of our strategy moving forward, of course, with developments in the energy sector, energy pricing that would favor energy storage. It certainly makes sense from a perspective of taking advantage of the opportunities that the -- in particular, the Australian market, but it's much more a global perspective, particularly in countries with a good direct normal irradiation, which means direct sunlight availability. It's proving to be a technology that will be quite advantageous for many of the global markets. So we're very excited about what's happening. And I would say keep your [ Is and Es ] posted for the end of this month.

Okay. Thank you. So moving on to another what we consider to be a very exciting topic is our nano-remediation technology, which we are now applying to the PFAS chemical contamination problem. Over the last 2.5 years, we have been engaged in a pilot project with the Australian Department of Defense. That project has officially in terms of measuring results ended earlier this year and we have submitted the final report, which is still being reviewed. So what we can say is that the contract that we have had with Defense has been extended to the beginning of next year. And one of the important parts is to after the arrangement is to evaluate how our technology can be used in the partner of Defense's efforts going forward to deal with PFAS contamination. If we look at it from a global point of view, actually from a European point of view, I think over the last 6 months, the press coverage of the PFAS contamination problem, was also referred to as one of the chemicals has definitely increased. So a topic that has been on the table for -- quite a few are already in Australia and North America, has also made it to Europe. And so we see global -- or this is a considerable growing regulatory pressure, the limits of human exposure to these chemicals is continuously being reduced. We see at the EU level quite a bit of activity. We also see that more and more member countries are introducing legislation, guidelines and limits in relation to PFAS chemicals. So it's a topic that is definitely becoming more and more visible at the moment. So we are now at a point where we are convinced that our technology for the remediation from PFAS chemicals is working, not only for groundwater, but also for soil and therefore, has a wide range of applications. So we are now moving into the commercialization part where we believe that until at the end of this year and beyond, we'll be able to provide some interesting news flow. And what I can also mention is that we have in Europe where, as I mentioned before, things are only starting. We -- last year, we have been engaged by [ Prague ] Airport to conduct a risk analysis of the situation in relation to PFAS, which we submitted this year and believe that this cooperation will have continuation, but we see more and more entities both in the public and the private sector having to engage and address this contamination problem. So the development phase in this pilot project phase has been very long, has been delayed for various reasons, most of them beyond our control. But we believe that we'll be able to talk about it a lot more going forward, and we also see a growing impact on our business. So on our financial results. And here it is, of course, the picture. A year ago was a bit better than today. The first and the second quarter, both of them have been challenging. The big dent in our numbers, of course, is a result of -- mainly a result of our shortfall in electricity generation revenues. So compared to last year when we generated in the first half of the year EUR 16 million, we only achieved EUR 11 million. Looking at the second quarter alone, we achieved EUR 7.2 million instead of EUR 11 million. So this is a significant shortfall, of course, expected, an increase also based on higher generation capacity and volume. So the 3 reasons I think we explained, given that electricity generation revenues have an almost direct impact on the bottom line. That, of course, feeds through the entire P&L. Looking at the second quarter, we have been able to increase or continue the picture of the first quarter, not, however, to such an extent that our other revenue -- the revenues from other business segments have grown year-on-year. So it has lessened the impact. But of course, none of these other activities has -- or comes even close in terms of EBITDA margin contribution to the overall results. As a result, we've seen in the second quarter a reduction in EBITDA by approximately 70% from 8.1% to 2.5% for the first half that shortfall has been slightly higher in terms of percentage from EUR 10.1 million to EUR 2.8 million. And at the EBITDA level, after being negative in the first quarter, in the second quarter, at least being able to have a -- get a positive number. That, of course, fed down all the way through to the bottom line, which in terms of defined as net profit where we generated a net loss of EUR 3.3 million. However, the revaluation of our newly connected power plants and as a result of positive other comprehensive income has kept our total competitive income positive in the second quarter. Here, I think it's important to stress that we consider this other comprehensive income from revaluation of -- valuation of newly connected power plants, but we essentially reflect the net present value generated through our investment activity as an integral part of our business model. We spent a lot of time resources to create those assets and costs that are below the value implied by discounting the future cash flows from these assets. So for us, this is an important element. It's of course, not cash, but it is -- we consider it an important result of our efforts. So there, we have been able to maintain result of course, given that our first quarter has also been negative -- the picture for the first half is negative. But we believe that we'll be able to improve that picture as we get towards the end of the year. On our balance sheet, in the first half, our balance sheet has grown, mostly driven by the connection of our power plants in Romania and correspondingly, we have seen an increase in long-term liabilities directly related to the project financing signed with Raiffeisen Bank International for our newly connected power plants in Romania, which we executed at the beginning of the second quarter. Looking at our balance sheet, what is important to point out is that all our financings are fully -- all our project financings are fully hedged. That means we are not exposed to changes in interest rates over the tenure of these project financings. Our bond, of course, carries a fixed coupon and only some of the context of our balance sheet, minor working capital lines have variable interest. So we are, to a very large degree insulated against swings in the interest rate levels. Of course, for new projects and new project financings, we will be -- of course, price takers at the time of concluding these financings. The important message is that for the -- currently as we're building in Romania, we're also progressing on the corresponding project financing. And we have -- for new projects we're doing in most markets multiple options of banks who are happy to work with us and finance our projects. On the cash flow statement here, I will repeat something we have already addressed when looking at the first quarter numbers, but also during last year that our operating cash flow is impacted to a significant degree by our investment activities. What I mean by that is that as we were building power plants last year, but it continues this year, in order to shorten the time to grid connection, we are front-loading a lot of the procurement. So we are sourcing a lot of the components like modules, inverters, mounting structure but also transformers ahead of time, which then held as inventory. So a significant part of that negative operating cash flow is the result of a bump in inventory during the first half of the year. That relates directly to our investment activity, but it skews the picture. That was the case also last year in the first half, and that basically has been repeated this year. Overall, we have managed to keep our net debt -- the change in net cash has been relatively low at the minus EUR 3 million since the beginning of this year. The outlook for the remainder of the year is development so far and given what -- how we see the situation, we have -- management has decided to revise our guidance. So we've decided to reduce our revenue guidance from EUR 150 million down to EUR 110 million, given the range of activities we're involved in the business lines and the various factors impacting each of those revenues are very difficult to predict. But this is a level that we feel comfortable with given developments, not only in the electricity market, but also looking at our components distribution business, the EPC business. At the EBITDA level, when we're presenting the Q1 numbers, we said that we would revise the EBITDA guidance and published the half year numbers, which is now. And here, we have decided to reduce our guidance to EUR 10 million from the original of EUR 24 million and compared to original EUR 29 million and just compared to last year's realized EBITDA of EUR 24.3 million, that is drop in . It is a very significant drop. Here, I would like to point out, however, that this year, the element of other comprehensive income, so value creation through creating generation assets is also playing a significant role. I also mentioned that we are reviewing and considering the potential to sell some of our project rights, not at any cost or not in a fire sale mode, simply based on our pivot in thinking where the future lies. So we are considering in some markets to potentially disposal of some project rights and the price levels that we see in the market indicated that would also generate capital gains, which, again, we would consider to be part of our performance. But looking at EBITDA alone, of course, one of the major items are electricity prices and also generation volumes. So by reducing our guidance to EUR 10 million, that's something that today we feel comfortable with, but of course, we are striving to end up at the end of the year in a better place than this guidance. But there's a lot of dynamics going on at the same time at the moment. And that's why we decided to update our guidance with a very conservative approach. Related to this, we are also updating our -- one of our strategic goals that we've communicated back in 2021, which is the goal of 600 megawatts of generation capacity by the end of 2024. So we have reduced it quite significantly to 200 megawatts peak. And that relates to utility scale solar only. What until the end of 2024, and of course, beyond we would like to do is add hybrid assets. Boggabri maybe one of them that could be finished by this time. I think it's a question mark at this point whether we would be able to execute additional projects of this kind until the end of 2024. Then the focus will be on storage only. But what I would also like to highlight is that in the future, there will be an additional item in our portfolio type of project, and these are behind the meter projects where we are investing as on the roof or on the ground next to an energy offtake and enter into long-term PPA contracts. And where we are deploying capital and based on mechanisms, which, in most cases, are fixed price mechanisms with either price adjustment or indexation clauses, which -- where we are also planning to deploy capital add on its own or actually as part of a wider offering to these energy offtakers. We are quite close to signing our first such project in Hungary, which may still get executed, that means built and connected this year. This is relatively small, below 1 megawatt, but we see really significant demand in this PV as a service type of offerings, where we deploy capital. And what is important as well is that on the other side, we have very strong interest from lending institutions to provide us with project financings actually at significantly higher debt to investment cost ratios on our utilities care portfolio. So this we expect to also contribute. However, at this point, particularly looking at the end of 2024, it is difficult to see how many megawatts we will deploy in that category. So this concludes our presentation, and -- so we will be trying to answer your questions. And of course, I would like to invite you to post additional questions.

So the question -- first question is we could put more color on the EUR 10 million EBITDA guidance. Well, lot of the cash, I think -- and not in detail. In principle, we are -- when we create our forecasts and budgets, and as you can imagine, this year, with the swings in energy prices, it has been necessary to adjust our calculations quite frequently. So what drives this -- so as energy generation is important, we have basically worked off and what was the monthly futures prices in the markets where we are selling electricity, cross check this with the German price levels because these are the most liquid futures instrument. So it's basically based on expected production and the prices indicated by these futures adjusted for the production profile of our solar assets. So it's essentially the current level of energy prices here. I would like to say that what we observed just the last 2 days is that at the long end of the futures curve -- future prices curve, we have seen a jump. So the futures prices for baseload in Germany have been now over and around EUR 84 to EUR 88 and there's no jump towards EUR 100. So -- and what is important as well is the inlet futures curve. Over the next 10 years, there's no point where we would even be close to our levelized cost of energy. So in other words, the market does not expect price levels to drop back to the EUR 40, EUR 50 that we've seen until 2021. So the expectations are that prices will remain over tend towards the EUR 100 level even 10 years from now. So the fundamental case is healthy. In terms of overall price levels, what we will see is probably further volatility in the intraday pricing structure where more renewables, more solar in particular, will probably pronounce the drop intraday. On the other hand, what can also be expected is that with the advent and growth in storage capacity in the network, also EV charging, there will also be more demand in those hours. So that may be at some point, the curve will again become a little bit less pronounced. So a long answer to a short question. So it's driven by large degree in terms of profitability by the pricing curve and also updated forecasts on our other segments, but none of which has the same small variations in revenues in one of our other business lines is such a strong impact on our own profitability. So in terms of the EBITDA from new energy, we have -- so a key driver is the capacity payments from the Polish TSO and we have been able in that area to generate some additional revenues. In the aftermarket, we have seen improving results on our origination and trading. So it's very largely driven by improved methods of forecasting of the assets that we -- our origination and trading teams managers. So the balancing costs that we really have been reduced, largely driven by better forecasting, but also by fine-tuned intraday trading. And we've also had some progress in building behind the meter assets across the region. The next question relates to the PFAS pilot project.

Mike, I would just add some color on the PFAS project in Australia. So it's actually very encouraging that we've had an extension of the contract. So yes, we definitely don't treat it as a disappointment. It's reflective of a bigger project that Department of Defense is, of course, contemplating. And across many sites, so for us, this is an opportunity to elaborate on how we may participate in future remediation work. So quite a positive development in that project. And we continue to collect results. We're continuing to assess the performance of this technology. And also looking into how it fits into a broader solution for sites with different hydrogeology and different areas of contamination, different flow rates under the ground. So it's very encouraging. We've had very encouraging results and we'll continue to go through that development and commercialization process. So our efforts now are really around how can we deploy this technology in other sites, how we can scale the technology to be able to expand it into other locations globally. So that's where we're now concentrating our efforts.

I think what I would like to add is because there's a reference taking that we expected some conclusions in H1, [indiscernible] -- and one important consideration is that here we're dealing with the counterparty that is still credited as it gets in general, but also -- so better or worse, but also the -- there is a lot of effort in validating the results. So it is not like we submitted a report in to somebody retail that are -- there's a lot of an outcome. So there's a lot of effort on their side and actually diligent effort to better understand and validate the results of our trial where Department of Defense has actually a group of various advisers. So this is a process that in combination with what I said at the beginning, something takes time. But don't take this as I wouldn't take as a reflection of the results themselves and in which we will definitely in the future as we have better opportunity to talk about in details.

Okay, and potential schedule for Australian projects based on RayGen technology. So there's 2 parts of that question. One of them is referring to the Carwarp project. So it's the first demonstration project of the full PV Ultra plus the energy storage system. It is -- we are at the point now where the project is complete and will be officially opened at the end of this month on the 31st of August with official event, which we will be participating in. And I would say that from a perspective of expectations, it would be really worthwhile to -- if you eye out at that time, we'll certainly be informing all of our investors and stakeholders of that event and what will be discussed there. So that's the first part. The second part is around what happens next. So the next project that is likely to be built would be the Yadnarie project. It's currently progressing through the final stages of the development activities. And we also have confirmed the site characteristics. We had to downsize that site due to the geotechnical constraints that we have, but it's still a large project, and it's still a project that will be significant from a perspective of its impact in the South Australian energy market. And what we would say about the time lines there. It depends on 2 factors. One of them is the ramping up of the production of the PV Ultra modules. Because RayGen are in the process of building a new facility to increase the manufacturing capacity to around 100 megawatts of technology of the PV Ultra modules. And that will enable in the next stage for a project of this size be constructed, probably over something around a 24-month period, given that we should be ready for construction at -- in about 12 months. So that is essentially the time scale. At the same time, we're working on other projects that would follow the projects concentrated in Australia at the present time but we're also working on projects in other parts of the world, including South Africa, for example. So there's a lot happening. And yes, we'll keep you informed about the progress on this.

Can you maybe answer this very last question now?

What geotechnical constraints. Well, it's actually -- because these projects are large, we end up -- and part of the lessons learnt from our first project in Yadnarie is when we do site selection, we need to be quite careful around different underground constraints such as bedrock and the ability to use land that is otherwise constrained perhaps by some seasonal flooding or other elements because these sites are very large. And those are the constraints that we've worked with, but we've also worked hand-in-hand with what is more easily connectable into the network. So it kind of fits together quite well. A project of 115 megawatts AC with a very high capacity factor because we can essentially produce energy 24/7 from this facility. It's a much larger project compared to traditional solar with storage. So we're still talking about a very large project. But, yes, of course, we have to consider those geotechnical constraints and also access to water to fill the ponds. We only have to fill the ponds once, but it's another constraint that we're learning more about as we move forward with other projects and we're adopting the project development process for future projects to have sites that where those constraints will be considered very early on in the process.

Okay. Thank you. So we'll go back on the questions. So the high eliminations in the first half of the year, while those eliminations are, of course, related to intragroup transactions. And here -- the 2 main drivers. One of them is related to energy trading, whether the electricity from our power plants in Hungary and the Czech Republic are sold into the market by our newly acquired entities as part of the acquisition of Lerta. So we've essentially just basically a handover. But -- and the other one that is very significant is related to our investment activity in Romania. So the way it works is that the projects are owned and realized by SPVs, of course, fully owned by the group. The EPC services are provided by Photon Energy Romania, again, a group entity. And the modules, inverters are actually procured by Photon Energy technology, which, of course, also does as an external distribution business, but it also is the procurement arm. So there's -- there's an intragroup transaction with the inverter to technology, either to the EPC model SPV directly as we've done in now Romania, but then our EPC arm provides services to the SPV. So there's a lot of intra-group transactions. So when we build a lot, there is a lot of eliminations. I mean there's -- of course, there's quite a few other intragroup transactions, but these are the 2 main drivers. And this is also why there are such significant swings. The working capital development, high receivables, VAT in Romania, well, we have had a buildup in our inventory in technology, mainly related to batteries. Most of that, at the end of last year, some of it in Q1 this year. The inventory turnover there has dropped significantly, but that is something we expect towards the end of the year to pick up again. And so there is, at the moment, quite a bit of working capital tied up in inventory, but that we expect to reduce significantly between now and year-end. We have also had -- I'm not sure that we in relation to our investment activity, there are also VAT -- negative VAT float issues. So in relation to the construction in Romania, there's some VAT that, of course, is recoverable, but it has a -- it acts as a drag on our operating cash flow. And in the case of first batch in Romania, these are quite significant material amounts. I would say there's a lesson learned there from us, which we are actually actively addressing in the project financing for the next batch and it is that we will also arrange for VAT financing line for the project SPVs. So that it doesn't act as a drag on our central cash flow. So overall, yes, I mean, we will do utmost and to reduce our working capital tie-up. I would even go beyond that, I would say, at this point, we are advantage a cleaning house possibility where a lot of that relates to really having a closer look at all parts of the balance sheet where we may have or do have resources tied up. Of course, most of it would be cash, can close to be something else and how we can release them, particularly even the -- either thing can be done in a better way, like, for example, in this negatively key drag in Romania, which in the next batch, we can avoid by structuring the project financing or the construction phase financing in a better way. It is, of course, about reducing capital tie-up and inventory, but there were other areas. So there is -- and is tied to that as well is past review of our project portfolio, other projects that maybe are not in line with our strategic direction. So clearly there, we've invested a lot of effort and timing to them. And it may be too [ early ] to release capital that we can redeploy elsewhere. So there's a lot of lift going on at the moment, and one of that is a significant possible reduction in our working capital. The last question, could you buy back your bond in the market. We have checked and the answer is actually No. I mean we did -- of course, when we had -- over the last couple of weeks, when there has been a drop in bond prices, we have -- it was very tempting. So the clear message has been that we cannot -- well, strongly advised not to do anything during the close period. So that was a hurdle -- well, in principal, we could, but it has to be in a structured process. So it's not like we can just go out and buy in the market. It would have to be in a structured way with proper announcements and -- of course, the offer has to be made to own investors, so we cannot go out and selectively buy from other specific investors or just ad hoc in the market. I would say, of course, we are following the situation very closely. We've been in touch with our bankers who have helped us with replacement of the bonds. Our reading of the situation is such that the German SME bond segment has seen materially better days than today. And of course, the big issue is that not only a few issuers have defaulted over the last year, but of course, all the liquidation of the KFM SME bond fund that has been announced some time ago, that now seems to get closer to being executed by the liquidators. And I think over the anticipation of that, given that KFM based on the last available information, which was at the end of last year, we -- our information is that they held at the end of last year, around EUR 3.5 million of our Green bond. Whether that is a number at up to date or not, we don't know. Whether they have been selling into the market at this point in time, we also don't know. And -- but there's been an announcement that liquidation will proceed, whether that happens in a structured way or in a nonstructured way, again, we cannot evaluate the -- we have asked our bankers to kind of give us their opinion of the trading volumes and the movements of our bond price over the last couple of weeks. So their evaluation is that somebody, none of us knows who disposed around 1.5 million of bonds in the market in a rather reckless and non-structured way. And whether that relates to the liquidation of KFM or was somebody else is really difficult to say. So of course, it's not a good picture. It doesn't help. But especially seeing this rather as the result of specific market dynamics, which then probably was exacerbated by reactions of other investors. I think the important message that we want to give today is the money to pay the coupon that comes up in a few days is on the account, so that will be paid. And of course, as we have demonstrated now for almost a decade as an issuer in the German SME bond market. That's also our intention for all future commitments we have from the bond, probably also aware that we have this in comparison relatively small check bond maturing at the end of this year. The outstanding volume there is around EUR 3 million, and that is also from element in our cash flow planning and will, of course, be repaid. In relation to that, we are not planning any capital markets action. So Interestingly, some of the investors we know that hold the bonds have asked whether we are planning a follow-on product and they expressed their interest. But -- it's not something we're contemplating, which doesn't mean that we may not look at the Czech bond market in the future, given that, of course, not the German SME bond market is in [ dire straits ]. But not in relation to the repayment of this approximately EUR 3 million of outstanding. But it's good to know that some investors at least are interested -- would be interested in the Photon product. So the next question is how should future capital requirements be covered our equity debt measures planned? I think we have to be very careful in what we say, of course, we are merging our capital structure. I think in relation to building or adding new capacity in line now with always the updated volume target for the year-end 2024. That is something we are, at this point, confident we can realize based on the back of project financing provided by the lenders that we have already been working with, so it means commercial banks that provide this type of project financing. We -- in terms of capital market, as I said, we don't expect to be [ comment ] until the end of this year. There is definitely trying to, as I mentioned before clean house in our balance sheet so that we can focus all the available assets to the development of our business. And we are working very hard on finetuning our approach to the integration of storage into our capital deployment. So whether that is hybrid, whether that is storage only in a utility scale setting, but also behind the meter. We are -- so there's a lot of modeling given that the revenue streams from storage are not as straightforward as from PV generation. And there, we also are facing financial institutions that are only at the beginning of the learning curve about that. So even if we are convinced that putting a battery -- installing a battery in any of our markets, it's a great idea. And of course, we need and want to include debt financing, and that is essentially where we were in our discussions with banks regarding the merchant model 2 or 3 years ago. There's a very strong willingness and interest by the banks to learn. So we engage with a lot of them. As I said, we do a lot of modeling, which we're trying to communicate, of course, the banks, and we also involve some advisers in this process. But the next 12 months, I would say there's still going to be a lot of work on the bankability. And there are, of course, also changes in the regulatory framework or certain -- for example, the ancillary services market is already -- is of course very advanced in Australia. It's quite advanced in Hungary. But in the other markets, it's not fully in Poland. Our expectation is to -- in the middle of next year, an ancillary services market will develop. This has been postponed in the past 2 or 3 times already. And ancillary services, of course, are a fundamentally important revenue stream for energy storage that actually gets -- these revenues get the return on investment above the cost of capital line. So -- there's a lot of work at dynamic. We are very focused on this, and we strongly believe in the importance and viability of energy storage in hybrid settings and storage only and coming back also to RayGen, I mean storage in renewables is something we bet quite a lot on investment. And I think when we exited our projects that we codeveloped filed with -- for a while with Canadian Solar, we then decided to -- that was our first pilot we said from on, we will only develop in Australia based on the RayGen technology, which has got most to the point where we have was Yadnarie. This commissioning of Carwarp, of course, is a very important milestone because it will allow us to bring in various potential investors and other partners and show them . We believe in this direction is reflected in this additional for new projects to our pipeline. And as Michael mentioned before, we are looking at other sites in Australia and beyond. So when we talk about hybrid, of course, it's not only PV but also, of course, RayGen and its applications. When is the new CFO coming? Well, I haven't didn't warmed up my seat, but well, the situation is such that since I took over, a lot of focus has -- I've put a lot of focus in strengthening the team. So a lot of several key positions in international department have been filled with newcomers. So we have a new Head of Accounting, we have a new Head of Treasury, also strengthened with new comers in our controlling department. But -- last but not least, a newly created position of Finance Director, which essentially is deputy to the CFO has been created and filled with an experienced person. So -- and now we are working in multiple areas to improve our processes, also in identifying ways how to improve our balance sheet structure and mobilize resources from all corners of our operations. But -- and last but not least, also to be a driving force in our already some time at the commenced process of implementing a new ERP system. So this -- these changes and strengthening of our finance departments have now been the core focus of the last 2 to 3 months. There -- I've to say I feel that we have made significant progress. As a result of this focus, we have not commenced the search of a new CFO. And in the next couple of weeks, we will across the management board and corporations Supervisory Board discuss the timing of commencing the search as such. So probably there will not be any immediate views on this topic. But of course CEO and CFO should be 2 persons. And definitely, there will at some point be CFO. And I think -- I hope it will positively resonate if you say that we want to get it right and we'd rather take our time to bring in the right person at the right time. But now, how to judge oneself, but I believe -- but I hope that -- it's not so detrimental that I am actually in this position on an interim basis. And I do see a lot of areas where we are making progress since I took over. Last question is what are your expectations for the Solar Technology segment in terms of revenue, EBITDA, what influenced to the significantly lower module prices have. Well -- so when we look at the revenues and also the EBITDA for the first half and compare it to last year's first half, actually, revenues and EBITDA are very, very similar. The significant growth in revenues and EBITDA in our technology distribution segment has occurred in the second half of last year, to a very large degree, driven by battery sales. And we do see the potential that also of the second half between now and the year-end, there will be a pickup in activity. So we would hope that a significant part of our revenues and EBITDA will come from that. On the module prices, of course, there's been a significant reduction in module prices. 12 months ago, we were at the level of EUR 0.26 to EUR 0.28 per at peak. Now we are firmly below EUR 0.20, EUR 0.17, EUR 0.18. We've seen some spot offers even below that level. So the same number of megawatts means there's less volume financially. But I think the margins as a percentage are to a large degree immune to these price levels, funding actually with lower prices, sometimes even the margins as a percentage can go up. We have been quite -- I think the impact of this reduction in prices which happened relatively quickly on our existing stock has been rather low. So we have significant stock with batteries, but we had very little stock of modules. So the ramp has been really, really limited. But overall, although we expect that this reduction -- significant reduction in module prices, of course, reduces the investment cost of solar and that is we need to increase the interest. So not only at the utility scale, but also for -- behind the meter installations and all the way to B2C applications, low prices which may be met in the next couple of months by again, rising electricity prices could actually fuel volumes in across all segments. So I think these lower module prices will have a positive impact on our segment itself, I think the impact of this in the next couple of months will probably be very, very limited in both directions. So that should be a negative. So the negative impact we have seen by having a write-off of our inventory that hasn't happened. Whether lower prices would drive up volumes between now and year-end in such a way that would be material, I wouldn't be convinced So actually, this -- okay, the question was whether this guidance -- our new guidance includes increase year-on-year for the segment. So the answer to that is no. We are currently conservatively assuming that we will have lower revenues on the EBITDA than last year. But again, we work very hard to land above with the new time line. So if there are no further questions, we would like to thank you very much for your attention today. And of course, I would like to reiterate that we are here to take your questions on a lateral basis, so please do reach out if you need more clarification. And I would like to thank Michael to be here for the first time after quite a few years and over to the end. And I'm convinced we'll do our utmost at 3 months from now when we present our Q3 numbers, we'll have or be in a better situation, then we have a better story to tell. So thank you very much. Have a rest of today. Bye. Bye.