Photon Energy N.V. ($PEN)

Good morning, ladies and gentlemen. We welcome you to the presentation and results conference for the Fortune Group for the first quarter 2026. To my left is Stanislav Zeman, our Group CFO, and we will jointly run you through the presentation. And then towards the end, of course, also answer any questions that you may have. So we will as largely the usual format, we'll talk about the business results, then thanks that will run through our financial results. And of course, given the current situation, will also walk you through the key elements of the group restructuring. . So starting with the business results the -- our most important segment in terms of annual EBITDA contribution remains our portfolio of power plants, which -- the size of which has remained unchanged, not only in the first quarter, but actually year-on-year. So we are at 134.7 megawatts peak, of which in terms of installed capacity, it is approximately even between power plants that are receiving comes from a support scheme and merchant assets. But as you can see in the generation overview and generation in the first quarter declined year-on-year by 6.7% compared to last year, mainly due to weather conditions. But for some reason, relatively, and this is rather random, the AMO performance was more strongly tilted towards the merchant portfolio. This is why you can see from a 50-50 split in terms of installed capacity. The power plants in the support scheme contributed more almost EUR 12 million -- sorry, 12 kilo watt hour out of the total of 22 kilo watt hour. A major for us is getting our Romanian assets to the stage where all of them have the generation licenses. As you're aware, last year for an extended period of time, we had 4 megawatts out of our 53.5, nonoperational due to regulatory reasons. So here, we have seen some positive developments in the first quarter. So on the February 17, Alan tech, which are part of our first group of power plants that we build and commission in Romania finally received trading licenses. So that's 9.5-megawatt peak that have been generating revenues from the market since that date. Rate, which is 1 of the 2 large power clients, which also had a still delayed, has finalized -- finally finalized its testing and conformity procedure and we expect the license in the next 2 weeks. But at the moment, the power plant is shut down. So there's a window shutdown window the fortune of the license. But in 2 weeks, we expect the license and then a few days later to commence sales into the market ahead of the strong so that we expect. And Budget 3, which is part of the power plants we connected later. And in terms of installed capacity, actually, our largest plant in Romania is also currently down. Unfortunately, we continue testing and the license we expect to obtain during the third quarter. Of course, it is now interest to speed this up with our team is working through screens. So -- in other words, the licensing, the regulatory issues we have in Romania are not yet final resolved. So in 2 weeks, we should be down to 1 remaining power plant, of course, 7.5 megawatts nonoperational rates is still a significant impact, but at least the problem is smaller than last year, and we are doing everything we can to have -- we have our team working full speed. As you can see from the electricity generation per country, in Romania, we did record in the first quarter, an increase in the production due to more megawatts being online compared to the same period last year. And across all other markets, you see a year-to-year underperformance, again, across the board, across the region, weekly radiation on the plus side and those who are following our monthly reports, you're aware that April was a very strong month. And given that we have also the numbers already in for May, we can also confirm that May has been above plans. So I think it is fair to say that as of the end of May, the shortfall that you see here, has been -- has been more than equalized. So year-to-date, we are across our portfolio in terms of generation numbers at or above planned generation volumes. And in financial terms, the revenues for the first quarter reached EUR 3.7 million. which is almost 12% below last year's number. And this shortfall split into 6.7% lower generation. And average prices being -- coming in around 4.5% of average revenues per megawatt, our 4.5% below last year's level in -- well, the split has referred to. And as you can see, in some of these markets. So in particular, Romania, the shortfall was relatively strongest. What is important to point out also going forward is that particularly for the feed-in tariff revenues that we generate in Hungary, the appreciation of Tanger in foreign after the recent parliamentary elections that took place at the end of April. As the feeding tariff is received in Hungarian foreign, expressed in euro and our reporting currency is the euro, there's also at least, for the time being, a positive effect. So the Hungarian foreign appreciated somewhere between 8% and 9% so far. And of course, that translates to one to one to an increase in revenues expressed in euro terms. Yes, as mentioned before, April and May, we're very positive. And -- but coming back to the first quarter, EBITDA from this segment declined from EUR 2.81 million last year to EUR 2.69 billion. But again, this is something that in the second quarter has been compensated by those strong performances in April and May. And as you can see in April alone, the outperformance was 24.3%. I don't have the corresponding percentage for me yet, but it was also well above the plan for the month of May. Moving on to technology in. So our business line that is concerned with the wholesale and distribution of PV components, mostly modules, but to a lesser extent, also inverters in batteries. You can see that our performance in the first quarter in financial terms was above what we saw in the first quarter of last year. So we managed to grow revenues by 6.5%. And you can see that in modules, we improved a little bit compared to last year. We managed to grow the volume of battery plus inverters, which are actually the commodity that has the lowest margin impact. We did a lot less than in the first quarter last year. In general, what we see is a growing -- a change in the market situation. So over the last 2 to 3 years for modules, but also the other components, it was very much a bias market. So there was a oversupply of pretty much all types of components. There were some changes to the tax regime in China at the end of last year and also as of April 1, so a reduction in a tax benefit for the export of car modules and batteries in particular, but also other elements other factors have led to a switching in the market situation. So at the moment, it's more of a sales market. And this, combined with the impact of the tax changes is leading to higher prices for components, particularly modules. And that is also accompanied with an increase in the gross margin that we are able to generate from our trading and distribution business. So then you can see that on the back of the 16.5% growth in revenues in the first quarter. The business line also managed to swing from a net 0 last year to a positive EBITDA of EUR 239,000 for the first quarter. And this growth trend in terms of revenues and correspondingly also profitability really have been able to observe now in the first 2 months of the second quarter, and we have recently updated upwards our budget for this year as we see growing volumes and based on the growing demand across many markets in Europe and 1 market that is of particular interest for us and where we see very dynamic growth in demand is Ukraine, which is one of our core markets in this segment. On the other hand, of course, given current global uncertainties, which also extend to transportation and other supply chain topics, there is a certain level of uncertainty. What we've been seeing for 2 weeks is an increase in shipping rates from China to Europe, which, of course, also had an impact on the procurement costs, which need then, of course, also translates into higher selling prices in Europe. So -- in principle, this is one of the business lines that we expect to have a very strong positive impact on our overall financial performance this year. And we believe that when we will be presenting our half year numbers, this will also be visible. Moving on to operations and maintenance, which, as you all know, is a very important business line for us, providing stable revenues and more and more stable cash flows. We have managed to increase year-on-year, the total capacity on the different forms of O&M contracts that we are signing with customers. We've grown by 9.2% to a total of 1.2 gigawatt peak. And in April, so after the end of the first quarter, we managed what we believe to be a very significant strategic milestone for us, which is an asset management contract for a 100-megawatt, 200-megawatt hour, stand-alone on utility scale battery system in one of our markets in the CE region. We believe it's 1 of the first batteries of that sale that is being commissioned, and there's a lot of construction and -- construction going on and I think the pipeline from what we see the pipelines for stand-alone base across all of our 5 core markets is growing very dynamically. So this is why for us, having been chosen by an already existing customer vials with whom we operate and work across several markets is a major milestone. And this is one segment that we believe to be of strategic importance and a strategic opportunity for us to grow our revenues faster. And in order to be able to offer the best possible granted packages to investors into these utility scale and the best systems, we are also changing the setup of our control room. So we are going from operating hours that are linked to the production of CL assets here in Europe, 24/365 operations in the next couple of weeks. And we believe that this is strategic service that we'll be able to leverage into multiple contracts in combination with asset management and over time, also operations and maintenance of these best systems. In financial terms, year-on-year growth in revenues has been -- has grown less than the growth rate was less than what O&M contracts would imply. So we grew our revenues by our external revenues by 2%. And there are multiple factors at play here, some of them relate to the seasonality of this business and in particular, in terms of additional services that our customers order from us. And -- but over the long term, we expect revenues to grow more than in line with the growth in contracts. In this segment, it is important to note that what we publish is external EBITDA, which means that the EBITDA result of this business line based only on the basis of external revenues as on consolidation, the internal revenues, which means revenues from the provision of services by our on business line to our own power plants across the 4 markets in the region where we have power plants is eliminated on consolidation. So looking at external revenues alone, that external EBITDA has -- negative EBITDA has shrunk from EUR 273,000 to EUR 78,000 in the first quarter. But if we leave our internal revenues in the picture, then you can see that this business line actually generated EUR 355,000 of positive EBITDA in the first quarter alone. So as at the entity level or the business line level, this is already a nicely profitable business line. We expect those numbers both expressed in external EBITDA, but also business line level EBITDA to continue improving in the next couple of quarters and beyond. The next segment, which in the past over the past 3 years was a pillar of our business. new energy, of course, we have, as you are aware from our filings, taking a severe hit based on the developments around the capacity market and the dispute that we have with the Polish TSO in relation to remuneration from 2024 which ultimately led to a situation where we had to file for bankruptcy on the 30th of March, this bankruptcy motion is currently being considered by the court in Basin. However, in the first quarter, we were worse selectively performing this business. However, as you can see, the business volume in the first quarter in terms of contracted capacity decline from 316 -- sorry, 326 megawatts to 120 megawatts, so significantly lower volume and that, of course, has had a major impact on the revenues. In terms of electricity trading in the first quarter 2026, we actually managed to grow the volume by 23% to 39 gigawatt hours. But overall, the total external revenues for the segment declined by 46% and the external EBITDA drops from EUR 2.5 million to approximately 220,000. And of course, once the bankruptcy will be declared for this -- the main part of revenues will be deconsolidated this -- the entity for 2020 will be deconsolidated and then no further revenues or EBITDA will be recorded, and we will continue with the energy trading in Hungary and the Czech Republic. So the contribution, both in terms of revenue and EBITDA will be significantly lower. And this takes us to the last event, which is engineering, where in the first quarter of 2026, we've seen a significant decline in revenues as last year in the first quarter, we were recording revenues both from our Australian engineering entity, but also the EPC project in New Zealand. So both of them were not contributing any more, and this is a business segment which is currently undergoing restructuring. However, -- the revenue recognition for the first quarter was very small, as you can see, it EUR 87,000 compared to almost EUR 2 million a year, but at the same time, also the negative EBITDA contribution could be significantly reduced due to a material lower cost base. And going forward, at the time being, the main focus is on C&I solar installations in some of the core markets in Central Europe. However, we also see an uptick in more in utility scale projects across our markets, which we want to address. To conclude this part of the presentation, I would like to highlight that we have based on developments in our business line, but also in our core markets, we have initiated a significant cost-saving effort, which at this point in time is still ongoing. But I think the first result of this can already be seen in our Q1 numbers. So we have been able to reduce the personnel costs compared to the same period last year by 29% to EUR 3.1 million. In terms of headcount, the reduction was 31.5%. So we are -- as at the end of March, we were at EUR 223 million as we speak, the number is still a little bit lower than this. So we are around 210 at the moment. And looking at other operating expenses, which came in at EUR 3.15 million in the first quarter, you can also see a 41% decrease compared to the same quarter last year. We have also mentioned several times that cost cost reduction is, of course, 1 major focus of ours. At the same time, we are in the process of selling various types of assets, particularly those that we at this point don't consider strategic, and that includes our ready-to-build portfolio and some of our operating power plants. So at the beginning of April, we signed a memorandum of understanding with a buyer for our portfolio of smaller ready to build power plants in Romania as well as 2 power plants with a total installed capacity of 4.9 megawatts peak. So this is a transaction that is ongoing, which we expect to close in the third quarter. And we are in negotiations and discussions with potential buyers for the Cupertino project, but potentially also some of our additional operating power plants in the Romanian market. And depending on demand and pricing, we will see which assets -- which operating assets we may dispose of in the remaining market. And on top of that, we are making good progress with our large project in South Africa. In Cozaar was 250-megawatt of concerned grid capacity and there as well, we will initiate after receiving now the full confirmation of the good capacity, we will start offering that project to a relatively large group of pre-identified potential buyers. And the goal would be to also divest this project before the end of this year. But the third part is of our recovery strategy is, of course, to grow those businesses where we can do so. So this will, for the time being, not include our generation portfolio as we are not intending to build any further powerplants in the near future, given our capital constraints. So we are focusing on increasing those business lines that can bring us material growth and so to speak, and move the needle. And here, they are business remains a core pillar. I spoke about the asset management services for BES. So this is something that we believe we will be able to -- and we're working very hard towards replicating that in the other markets in the region and with other clients or existing or future clients that are in the process of developing and building best systems across the 5 core markets that we serve. And of course, another business line that we expect to become a significant contributor to our financial results with water and remediation. And I think on our last call, I mentioned that we have developed a filtration unit that can fill the pipes out of fire finding foam, which reduces the need and the cost of the final disposal of firefighting foams, some of which are already prohibited in the EU, other soon to follow. And in the -- since our last call, we have managed to sign our first contract with a buyer for this technology, and that is a leading U.K.-based manufacturer of fire extinguishers. And we have 2 more additional very advanced negotiations. -- about the sales. So we are quite hopeful that still in the second quarter, the beginning of the third, we may be able to sign 2 more contracts -- and that pipeline of interested partners is growing and it's -- and in general, the whole entire topic of the exchange of PFOS-containing firefighting foams in the U.S. gathering steam. So the addressable market for us is developing very positively. So with this, I will conclude this first part of the presentation and hand over to Stanislav to run you through the financial results.

So regarding the financial results for Q1 2026. As you can see on our screens, consolidated revenues reached EUR 17 million in Q1 2026. It's representing a 22.5% year-on-year decline. Revenues from electricity generation amounted to EUR 3.6 million, means down 11.7% year-on-year. it's primarily reflecting lower generation volumes and prices. Other revenues decreased to EUR 13.3 million, down by 20.1% year-on-year. The most significant contraction was recorded in segment engineering and new energy, as mentioned before. On the cost side, expenses for users and consumables decreased to EUR 10.3 million. It's minus 4.8% year-on-year, underperforming the decline in revenues partially due to the restructuring as some costs were still incurred without corresponding revenues. I would like to underline that personnel expenses amounted to EUR 3.1 million, it means mines 28.9% year-on-year and other operational expenses amounted to EUR 3.1 million, down by 41% year-on-year. EBITDA of EUR 0.2 million compared to EUR 1.2 million in Q1 2025. It needs to be noted that the EBITDA contraction is the result of lower EBITDA generated by the new Energy division has contributed EUR 2.4 million to the consolidated EBITDA in Q1 2025. Other comprehensive income was positive as amounted to EUR 2.1 million as a result of a positive foreign currency transaction difference and deliver instruments, which amounted to EUR 2 million. So the total comprehensive income came at EUR 2.4 million compared to a positive result of EUR 0.014 million in Q1 2025 million. So let's move to balance sheet fixed assets amounted to EUR 220.8 million compared to to EUR 224.8 million at the end of 2025, decline of EUR 4 million due to the...

Do want to move...

Sorry...

I think you're a little bit out of screen.

Sorry. Sorry. So the decline of EUR 4 million due to the depreciation of property, plant and equipment and decline in right of fuel risk assets, which is related to the consolidation of the Australian companies. Current assets declined to EUR 43.4 million compared to EUR 47.1 million at year-end 2025 due to decline of the total amount of receivables, trade and others by EUR 2.3 million and reduction of cash and liquid assets by EUR 2.4 million. Equity of EUR 61 million compared to the level of EUR 23 million recorded at year-end 2025 due to the negative results booked in the period. The adjustment equity ratio stood at 23.1% compared to 22.9% at the year-end 2025. Additionally, an impact of the regulatory changes in Romania, which results a loss of earnings was imported in the reporting period, applying the carve-out, the adjustment active ratio at 31st March 2020 fixed stood at 24.7%. The bond covenant, which requires this ratio to remain about 25% is assessed at the year-end following the completion of the adjustment accounts -- or the audited accounts, sorry. Long-term liabilities remained stable at EUR 169.1 million compared to EUR 169.6 million at 2025. Current liabilities amounted to EUR 44.1 million and decreased by $4.7 million compared to year-end 2025 balance of EUR 48.8 as a result of the decline balance of all payables by about EUR 4.6 million. And the last financials is the cash flow. As you can see on our streams, the operating and cash flow of EUR 1.4 million was supported by positive FX transaction difference and other noncost items -- noncash items. Investment cash flow of minus EUR 0.3 million was related to the deconsolidation of Australian assets and small outlays related to the development of projects. Financial cash flow amounted EUR 2.3 million as a result of repayment in the amount of EUR 0.8 million and intense payments of EUR 1.6 million of which was reduced by APT coupon of EUR 1.2 million, which was due on 23rd February 2026. Net cash position decreased to EUR 1.7 million .

Okay. Well, I think it more important to say that this cash position in this chart is the free cash. There's also restricted cash held in our balance sheet. So in the next section, I'll walk you through the various aspects of the restructuring that the group is undergoing, I will start with the business side and specifically with Australia. From the February 20 of this year, the group decided to put free of its subsidiaries in Australia, and that is Photon Energy Australia, Photon Energy operation in Australia and Photon Energy Engineering Australia into voluntary administration. And is the result -- this was the result of basically a net weak outlook for the business, which over the last 3 years, we have not been able to move closer to the line. So it was a combination of margin pressure in the market and essentially our inability to scale the business start making margins. So in 2025, these 3 subsidiaries and most notably, Photon Energy engineering generated EUR 6 million, which were recorded in the -- and our 2025 accounts, but it also contributed a negative EBITDA of approximately EUR 1.5 million. We are -- this step, which now is leading to the liquidation of these 3 entities is, of course, significantly reducing our footprint and remaining activities in the Australian market. We still have our water and remediation subsidiaries. We still have our investment in region, and we, of course, also have our investment in the project entity that has developed the Jornay project based on the region technology. where we are still in the ongoing sale transaction of the project to AGL, the largest energy generator in Australia region decided to invest into the an upscale power plant based on the region technology. So this transaction is still ongoing as it is structured as a as an asset deal linked to some milestones. We hope to close this now in the third quarter. And we also hope that at the beginning of 2027 based on our latest information at the end of Q1 or the beginning of the second quarter '27, AGL will hopefully make the final investment decision, which is a stone to -- for us to receive that so-called FID payment of approximately AUD 4 million. In general, we review, we still have also some other minor assets. One is an energy trading license and also a small rooftop power plant in Canberra, which we are working on selling. So basically, the direction of travel is to reduce our Australian activities either to complete minimum or probably face them out completely. The second area is the capacity market and origination and trading in Poland. So as mentioned before, on the 30th of March 2026, the developments of our dispute with PSE over the return of revenues for 2024, where we have appealed PSE's decision and also then the decision of the regulator by going to administrative court. And also, however, PSE think unilateral decision to offset the been receivable from this reimbursement of revenues has led to the situation that we had to fight, as the were not receiving and I also don't expect to be receiving any revenues until the end of the second quarter. it means that this business activity will not continue as part of the Photon Energy Group. Unfortunately, we are through this bankruptcy filing and ultimate bankruptcy. One is declared, we are also losing our energy trading license, which was, of course, the the base for origination and trading and also was supposed to be the basis for providing ancillary services to the market, essentially, we are in terms of the new energy segment losing our entire business in Poland. As mentioned before, what will continue is the energy trading and related activities in Hungary and the Czech Republic. So this financial impact, of course, is very significant as in 2025, Photon Energy Trading contributed almost EUR 16 million in revenues. But after recognizing the revenues, which is fully reflected in the 2025 accounts and on top of that, also some additional fines that PSC let on us in the fourth quarter last year, the contribution to the group, which otherwise would have been very positive has slipped to a negative EBITDA contribution of EUR 1.6 million in 2025. In the update of the preliminary 2025 numbers, which we published last week. We recognize now that bankruptcy was -- has become a certainty. We have recognized an impairment of goodwill in relation to this business line of EUR 5.8 million. That also impaired intangibles which were capacity market contracts that in the acquisition of Slater back in 2023 where also valued separately as part of the acquisition consideration. So it led to another impairment of EUR 3.4 million. So compared to 2024 when the capacity market -- well, new energy driven mainly by the result of the capacity market were significant contributors, of course, these revenues and this contribution will be missing in our results going forward. And of course, we are working very hard to develop the other business lines so that they can fill that gap. On the other hand, it's also important to note that with the wind down of this business line, also our cost base as to the number of supersonic costs, but those operating costs as well as R&D spend, which we capitalized will be significantly reduced in the future. The situation around the dispute with the PSC, which informed us in February about its intention to offset this disputed amount of EUR 3.2 million, led us to the difficult decision of delaying the payment of the coupon June the 23rd of February in order to preserve liquidity gave uncertainty. And coming back to the bankruptcy process, we still have to ensure the operations of the entity that means for financial trading until the court decides and appoints a bankruptcy administrator, which, at this point in time, we expect to happen in the next 2 to 3 months, more likely 3 months, that means towards the end of the third quarter. And that is a significant drain to our -- so keeping the lights on, at this point, a significant drain on our liquidity. And on that basis, we also had to make the rather difficult decision not to pay a second coupon on the 23rd of May. It is important to note that the nonpayment of the coupon is, of course, a negative side to the market. However, from a legal point of view and based on the -- based on the terms and conditions of our green bond, the nonpayment coupon in itself is not a reason for termination by investors. They have the legal right to by German law to take us to court over this nonpayment of the coupon which as far as we are aware has not happened yet. And we have started the process with the aim to restructure the bond. Important to note that in our industries, so the renewable energy sector I would say, at this point in time, we are, by far, not the only ones who are having a difficult time. And over the last couple of months, some of our peers in Germany that have issued bonds in the German market also had to go back to the investor bondholders and seek a restructuring. I think the most notable one is AbwaEnergy, which had to have some of the teen conditions in that long chain. So the process, the correct process for us to solve the situation is to call a bondholder meeting, which we are planning to do in the next couple of days to resolve matters that are important that we are aware are important to the bondholders, but also matters that are important for us in the context of the current terms and conditions of the bond. So without being able to be too specific, we have 3 large bondholders that jointly hold over 40% of the outstanding nominal. And this group has been able to formulate certain priorities. And 1 of them is the appointment of a bondholders' joint representative, which in such a restructuring situation is a common feature in the German bond market. Bondholders actually has to have the right to appoint a joint representative in any circumstances. So if bondholder decide to call a bondholder meeting, they can they can decide to a point senate, which unnormal circumstances, of course, is not important, but in such a restructuring situation, it is. So this will be one of the points to be resolved at the other meeting. There will also be a process where we will be seeking to present to our bondholders an independent view of the prospects of our business so that any annual restructuring that are actually on independently generated assessment of our current business and future prospects. And in this -- in this bondholder meeting, we will also seek to address the deferred coupons, but also we will also be seeking a obviously relief on the equity ratio. As you are aware, we are still in the process of our audit. So we had to postpone the publication of our aided results from the 30th of April to the end of July. And given the development, particularly in the capacity market business in Poland and the goodwill that was recorded as part of the acquisition. As seen before, we have already reflected certain opens in the update of the preliminary numbers, but this discussion is not completed. And in order to be on the side, we will also be seeking relief on the equity covenant in this bondholder meeting that we will be calling in the next couple of days. Based on the terms of -- and conditions of our bonds, there's a 30-day period for the convening this bond through the meeting. It means 30 days after the publication of the invitation it will take place and which means at this point in time, we expect it to be sometime in the first half of July. And at this meeting, significant or detailed restructuring terms and conditions are not expected to be taken and that will then -- should then take place after the publication of this independent business review sometimes totally ended the third quarter at the beginning of the fourth quarter. And of course, we will keep the market updated about the progress in our restructuring steps. I would dare to say at this point that we have so far encountered a relatively high level of understanding of our situation, how it has evolved. As I said before, the sector at large is undergoing significant stress in Europe. So we are absolutely not the only company in the renewable sector that is having a difficult financial situation. And as you can see, we are addressing it in a way foreseen by the German -- by German law and the terms and conditions of the bond. Well, thank you very much for your attention so far, and we are now open to answer your questions as far as there are any. No questions. Okay. Well, in this case, we would like to thank you for your attendance. And we are -- as you can see, we have -- there's a lot we're working on, and we're actually determined to turn a situation around find a good outcome for the board restructuring and even house some of our remaining business lines are performing so far in the second quarter, I believe. And I sincerely hope that we will be able to present you an improved picture at the next presentation of our results, which will be the presentation of our half year results. So until then, thank you very much.

Thank you.

Wish you a great day. Thank you. Bye.