PNE AG (PNE3) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the PNE AG Fiscal Year 2022 Results. [Operator Instructions] I would now like to turn the conference over to Markus Lesser, CEO. Please go ahead.

Good morning, everyone, also from my side. Thank you for joining us today in this conference call on the results of the financial year 2022. Going on, I would like to share with you an outline of the presentation and the procedure of today's call. As usual, I will start with an overview about the operational and strategic highlights of the year. After that, I will comment on our financial figures. I will conclude my presentation with our outlook for 2023. As always, we will then open the line for the sell-side analysts only. All other participants will stay in listen-only mode as it is our company's procedure for years. As usual, our slides that I will use can be found on our Investor Relations website. Having said this, I would like to draw your attention to Slide 3. In operational terms, and to say this upfront, as well as in financial terms, 2022 was a highly successful year. We have further expanded our pipeline that stands now as per end of 2022 at a record level, reaching 11.8 gigawatt/gigawatt peak. This development represents an increase of 71%. We accelerated our PV activities by the acquisition of the Spanish developer, KOLYA, in June 2022. Consequently, our PV pipeline almost quadrupled to 4.3 gigawatt peak. We have sold, put into operation or have under construction projects of about 482-megawatt/megawatt peak. Strategically, of high importance, we grew our wind power generation portfolio from 233 megawatts end of 2021 to 318.9 megawatts in 2022. And we produced in 2022 around about 500 gigawatt hours green power. Adding around 89 megawatts under construction for our own portfolio, we are not only coming close to our 500-megawatt target for 2023, but also laying the ground for achieving this target already ahead of time. I will come to this in a couple of minutes. Furthermore, we have sold a 9-megawatt wind farm in France and have completed 3 wind farms in Germany and 2 in Poland. In addition, we had projects with a capacity of 154 megawatts under construction at the end of 2022. The operation management manage now 2,500 megawatts. This is a growth of approximately 20% compared with the previous year. The operating performance was clearly marked by our power generation segment, driven by the higher installed base, the improved wind yields and the higher power prices, the total output in power generation increased significantly. This also shows that our strategy to build our own IPP portfolio is already paying off. Consequently, our role as an independent IPP has been strengthened further. On the other hand, we have to recognize that Ukraine crisis, that war, and more the COVID-19 effects have been leading to unstable support chains and higher raw material prices, which resulted in higher costs for wind turbines and modules. Over the course of 2022, these effects could be partially offset by the higher power prices. Nevertheless, we prepared ourselves to secure prices and delivery times for winter lines, transformer stations and cable works. For example, we have ordered 9 transformer stations in advance and round about [ 70 ] kilometer cable works for future projects. Additionally, we secured KfW loans in the amount of round about EUR 400 million to secure low interest rates. By the way, we have been the first to develop this special solution with KfW and the banks. The effects of the introduced scheming of the so-called windfall profits were rather limited for 2022, as we just booked accruals for the month of December only. Since power prices normalized in recent months, the federal government already announced to withdraw, respectively, not to prolong this bureaucratic mechanism. All in all, the effects of this mechanism should be rather small for 2023. Beneath our very good operational performance, it is worth mentioning our very successful Capital Market Day in November as a highlight in the fiscal year. At that occasion, we presented our updated strategy, Scale Up 2.0, which I will remind you on. Looking at the financials. We are pleased that we exceeded our EBITDA guidance quite significantly even considering the upper figure of the original target of EUR 20 million to EUR 30 million. EBITDA increased by 8% to EUR 35.4 million. This remarkable operational performance was accomplished on the back of an almost stable total output of EUR 243.3 million, slightly down minus 3% from the last year's figure of EUR 252 million. If we adjust our EBITDA for our so-called hidden reserves, the operational profit came in at EUR 77.9 million, slightly down from the last year figures of EUR 85.7 million due to the growing life of our own wind parks. As already mentioned, the results were mainly driven by the strong performance of the Power Generation segment, which benefited from the higher installed base, the improved wind yields and the higher power prices. I also want to highlight that we successfully placed our new cooperation bond with a volume of EUR 55 million and a coupon of 5% in the market in June. This gives us good visibility to our planning until 2027. Considering the strong operational performance, also our cash position was EUR 121.6 million and equity remained with EUR 232.2 million remained at high levels despite the investments in our portfolio. On Slide 5, ladies and gentlemen, we can follow our share price performance in this chart. I guess you all know that our stock was the best performer among all stock listed in DAX in 2022. We believe this performance was mainly driven by our very good operational development and further good performance anticipated by the market. On the back of the share price performance, PNE was included into the SDAX in June 2022. This is a recognition of our work on the one hand side. On the other side, it is also a motivation for us to continue our strategic path. Clearly, the share price performance was also attributable to a large amount to M&A speculations. We all witnessed this development after the announcement of our managed shareholder of no longer intending to sell of it -- to the sale of its stake in PNE at the last time -- at least for the time being. Hence, our share price decrease -- performance decreased in recent months in light of the current stock market uncertainties. Nevertheless, I think that our share hasn't been hit too hard. In pure numbers, our share price increased by 153% to EUR 21.35 within fiscal year 2022. The aforementioned development left our share price mid-March 2023 at EUR 14.74, still a compelling performance of roughly 75% from beginning of 2022. In terms of market cap, we are still above the EUR 1 billion mark after peaking at around EUR 1.6 billion at the end of 2022. Ladies and gentlemen, I would like now to draw your attention to Slide 6. On this slide, we summarize the proof of proof points that underline our successful evolution towards a meaningful renewable energy player. As such, we are an integral part of the so-called [indiscernible] in Germany and probably in Europe as well as the one point, which is increasing as well as [indiscernible] is desired by societies, people and its politicians. Certainly, there is one point, which is the increasing share of our business area, electricity generation, EBITDA and group EBITDA before consolidation. It clearly shows PNE's growing importance as an established IPP. Proof point 2 is the equivalent range of our role by the participation in 2 business delegations that accompanied German Chancellor Olof Scholz on trips abroad. For us, it has been a great honor to be able to represent PNE's interest into setting. Consequently, the evolution towards a meaningful energy player and a strong as well as reliable IPP is also supported by PNE strategy, Scale Up 2.0. So let me remind you on Slide 7 on our strategy, Scale Up 2.0, that we presented the first time in the Capital Market Day in November '22. We said that we want to come up with our EBITDA above EUR 150 million in 2027. This is an increase of more than fourfold by 2027 by the -- increased more than fourfold by 2027. We want to expand our own generation portfolio to 1,500 megawatt/megawatt peak, and want to increase the pipeline to more than 20 gigawatt/gigawatt peak by 2027. We also want to -- intend to make investments of around more than EUR 1.6 billion from 2023 to until 2027 in its own generation portfolio, as in further investments in new markets and technologies. On the next slide, we see the expansion of the own generation portfolio, which is accelerating. We have now 300 -- or at the end of the year, we had 318.9 megawatts. And nowadays, we think about in January, we won a tender of 96 megawatts, another 10 megawatts we had from the September tender. And we will start the construction of these projects in Germany very soon. Another 12-megawatt tender has been won in France in March. So that gives us a very good outlook to achieve our targets for this year of having 500 megawatts in operation or under construction. Last year, we produced 509 gigawatt hours of green energy produced in 2022. This is an increase of 72.5% compared to the fiscal year '21. This is a very strong increase and shows where we will come to when we finalize our projects we intend to go into construction this year. The project pipeline is at a record high with 11.8 gigawatt/gigawatt peak. This is an increase of around about 5 gigawatt/gigawatt peak in a year-on-year comparison. And the 1.8 gigawatt is related to the wind portfolio and round about 3 gigawatt peak is related to the PV pipeline. Having said that, we see on the next page the project pipeline with onshore which increased by around about 1.8 gigawatt. And we see still the high level of projects, which are in permitting phase in Germany and France with around 790 megawatts, which are the main markets for our IPP portfolio. In total, we have 1,157 megawatts in a permitting phase, which is a very high number as well. As said already, we finalized the project in Krzecin and Kuslin in the total around about 59 megawatts until we sold in quarter 4. And we have already the wind farms Groß Oesingen, Ost, Adensen, Gnutz and Kuhstedt completed in fiscal year 2022. Looking at offshore wind, we see all the time, we didn't say that much about this issue because we wanted first to come up with some results in this first quarter, in January, we could sign a memorandum of understanding with the Binh Dinh province intended for the future feed in -- of energy. We have a small team established. And this is a project area for around about 2,000 megawatts in Vietnam in 3 phases. We are waiting for the remuneration system, PDP8, where all the conditions will be defined for the future offshore development in Vietnam. Secondly, in the first quarter, we took over -- we stepped into a 50-50 joint venture with Eolus with a 1,000 megawatt project in Latvia. It's an earlier project stage. But we want to step in, in the future tender systems and prepare ourselves for that. The PV pipeline that's set already. It's -- we have a plus of around about 3 gigawatt peak majority, driven by the acquisition of the Spanish developer KOLYA, 51%. So the pipeline we took over the other pipeline of approximately 1.8 gigawatt peak. Looking to the financial figures. The output, as I already said, is broadly stable to the fiscal year '21. EBITDA could have been increased by 8.3% in the year-on-year comparison. And we exceeded the guidance significantly. So mainly driven by various project sales and internal sales related to the buildup of own generation portfolio and related. As you know, related to the strong results from Power Generation, fueled by expanded installed base and higher energy prices. So the financial result hugely impacted positively by a valuation of interest rate swaps. I mentioned this several times. This is related to IFRS rules and have this influenced due to the fact that we have increased -- increasing interest rates. The tax expenses of EUR 9.8 million normalized as the formation of the deferred tax loss carryforwards omitted as well as the utilization of loss carryforward and tax-free gains shrinked compared to prior year. So therefore, we have an income come -- which is around EUR 14.5 million. Looking to the business segments you could see different developments. So the project development output decreased by minus 21% to EUR 210 million, and EBITDA were down to EUR 26.8 million. This is mainly related due to the delays in the deliveries of the wind turbines and some sales events, which we have to postpone into this year. The services output grew to 16% and the EBITDA up to EUR 6.1 million, so close to 20% additionally. So we see slowly the results out of the investment in this area. The Power Generation output jumped to EUR 73.8 million plus 123%, and the EBITDA up to EUR 57.7 million. So it's up 149.8%. As I mentioned already, is related to the higher wind deals, the high energy prices. So therefore, we see the bigger role slowly but steadily coming up through the investments in the Power Generation. If you look to the balance sheet. So with EUR 920 million, we are coming closer to the EUR 1 billion level. The cash position decreased to EUR 120.6 million, mainly due to the expenses we put in into the development of the project pipeline and the realization of the wind farm projects, the equity ratio is still at 25.2%. The liabilities of noncurrent debt and the current liabilities are mainly related, as I said several times, on nonrecourse financing and increase with the investments in our portfolio from that point, I would say, business as usual. Ladies and gentlemen, this leads me to the outlook. We are very pleased with the results in 2022 and are ambitious for the current fiscal year 2023. We expect for the full year 2023 for the group an EBITDA of EUR 30 million to EUR 40 million. This guidance is supported by the very dynamic market environment that provides opportunities and had some risk also regulatory risk, but the opportunities also in power prices, hydrogen, et cetera. But you know as well that we have constraints like our price break so-called power price break and prices and delivery times in all goods, which are related to wind turbines and transformer station and others. So our -- we continue to build up our portfolio, 89 megawatts under construction for own generation portfolio. And we see that the fact is that we won all tenders in the most recent tender processes in Germany and France. Together with the 96 megawatts we won in February, 10 megawatts we won in September last year, both in Germany and 12 megawatts in France, we brought to the tender plus -- bought through the tender, plus the purchase of some turbines related to repowering, we have approximately 528 megawatts of wind projects onshore in operation under construction all through the tender for our own portfolio. We are already in March '23 close of our target to have 500 megawatt in operation or under construction by the end of 2023. Our well-filled and growing project pipeline of 11.8 gigawatts is certainly one -- another point. And by our strong investment according to Scale Up 2.0 into our own generation development portfolio, we see another point, which leads to this guidance. Ladies and gentlemen, before I conclude my presentation, let me please allow 2 further remarks on the strategic review process we just initiated concerning our U.S. activities. As part of our corporate strategy, the PNE group regularly reduced its activities in the various markets. This is currently also happening in the USA. PNE is reviewing the sale of its U.S. business. The background to this is that very high guarantees and securities have to be deposited on the U.S. market at the moment, especially related to grid and which now the -- in some areas in the United States will be intensively expanded. In addition, a good part of the margin is achieved with the construction of the project, which requires high investments. To get increased margins, PNE would have to invest very heavily, which would be at the expense of expanding the internally operated portfolio in Europe. At the same time, demand for project pipeline under development, as well as experienced teams in the USA, is currently particularly high due to the inflation reduction act. So that we believe that an exit from our U.S. business at the current market stage with a reasonable price level for our activities could free up resources, which we could steer into the business expansion in Germany and other markets abroad. To make it clear, no final decision is made yet, but the process has been initiated. Finally, I would like to mention our dividend proposal at the upcoming AGM. Subject to the approval of the AGM, we pay a dividend of EUR 0.04 per share plus a special dividend of another EUR 0.04 per share. Ladies and gentlemen, this concludes my presentation. Thank you for your attention. We are now open for questions.

[Operator Instructions] First question is from the line of Guido Hoymann with Metzler.

Three or 4 questions, actually, from my side. And the first one is regarding your targets for '23, your EBITDA target. It appears to be quite cautious, in my view, given that you will increase your own generation capacity, I think, by 30%, 40% or so on average, first. Second, the, I think, onshore wind has been pretty strong in Q1. So you have the tailwind. And last but not least, you also mentioned that you had delays, project delays, which should then materialize this year. So to summarize this first part of my question. What are your assumptions for -- maybe for the electricity price, maybe for caps? What is the reason to be that cautious? That is question one. Second would be maybe briefly on your U.S. business. I think there have been articles around mentioning some 4-gigawatt size. I think you show in your pipeline less than 1. Can you comment on that figure, please? The third one is regarding your contract, Mr. Lesser. I think it runs out or runs until the end of this year, if I'm right. Can you share any insights if this contract will be extended? And if you want it to be extended? And maybe last but not least, the fourth question on your pipeline growth. Of course, you had big jumps in Poland and Spain from the acquisition, South Africa. But in the core markets in France, Germany, the pipeline grew actually only by some 100 megahertz or so. So what is actually dampening the growth in these core markets? Okay. That's it.

Okay. One question related to 4 gigawatts instead of [ 1 gigawatts ]. I couldn't recognize what -- which country you're talking about.

U.S.

U.S. Yes. Okay. So first of all, related to the targets. Yes, when we discussed about the targets we had in mind, and please, you have to consider that every day, the regulation and the press releases around that is changing. So we had in mind press -- the power price break, what is the influence on our side. We had the insecurity related to energy prices in general. We have also to see that some of the projects we are intend to construct. We have to see which -- what are the conditions around that. So we are negotiations related to prices, related to lead times. And this is always an issue where you try to find your way through. We are not known that we are the very aggressive guidance makers in the market. But nonetheless, I think on the other side, we will see in this environment of a lot of insecurities, and we give the guidance where we think we are sure that we can get it done. So this is the reason related to that. Related to the U.S. market, we have always came up with numbers which are careful related to and which takes into consideration and sometimes that we have effects even in solar business, especially that some of these projects can be -- can be not finalized. So we had a shorter amount showed in the U.S. market. On the other side, we will see that there are -- we see that there are additional opportunities for every project, for example, to sell prices due to the fact that the PPAs are built in another way to -- with battery solutions to expand it by hydrogen, but these are always ideas. And we are not keen to present this as a real number so that every analyst and every investor can say, Oh, there's a big business. So that we don't intend to do. So therefore, we are careful also showing these numbers. On the other sideline the core markets, the pipeline growth yes, we have pipeline growth in different markets. And that's for sure. But also in Germany, we have a growth in -- when you see the overview about the German market in PV is a strong increase. And -- but nevertheless, also in this kind of markets, like France, Germany, you have always the situation that the areas who can be prepared for wind or PV business are rare. So there's always a fight around areas. So that makes them so worthful at the end. It's one part of that. So therefore, yes, we fight for it, but we have a growth. And this growth, you have to see always in the relation that every year, round about 100 to 120 megawatts are in -- for wind, for example, are stepping out of the business because they are going to be built and going to be in operation. From that point of view, I think we have a good growth in these kind of countries. So related to the contract. The contract is always an issue, which has to be defined and prepared from the Supervisory Board. I can only say that there is something in preparation.

The next question is from the line of Holger Steffen with SMC Research.

I have another question about your forecast. Is any contribution of the sale of the U.S. business included in your forecast?

No, not yet.

Okay. And in the annual report, I have read that you got in January a notice from the BSH about the possible compensation for your former offshore projects. Is any part of this compensation included in your forecast? .

No, it's not.

Okay. Will this be finished this year maybe? Or is it...

Yes. So we are not satisfied with that, what they are offering, which is on the lower end of a 1-digit million area. So we are not satisfied with that, and we think that's why we have discussions.

Okay. In 2022, we always talk -- you just talked about your pipeline. And we see a big progress in the onshore wind pipeline in Poland and Sweden. Maybe you can give us some details about this very successful development?

Please, can you repeat the question? I had some disturbance here. In Sweden and Poland.

In Sweden and Poland, your onshore wind pipeline.

So yes, I think now we have a new regulation in Poland and the regulations we prepared ourselves with projects, wind projects. And now we have to start the building sort of further process. There have been some changes in Poland to the distance. They had a special distance of 700 meters now, which where we have to go into some project and change a little bit the design. But we are on a good path to step into these areas and develop the project furthermore. We see Poland as one market, one major market for us as well for our IPP business. So Germany, France, Poland and on the long run, Italy and Spain in PV, which we outlined in our strategy at that time. So from that point of view, we are on a good path. So -- and we see now, after the regulation had been filed, a view that it has a real support from the Polish government, which hadn't been there before.

Okay. And in Sweden, what was what causes of big progress in Sweden?

In Sweden, we are still in development and more and more projects. Yes, we see that as well as the market is one of the Nordic market with a special rules in terms of how to develop and especially in terms of pricing of projects, very competitive market, a competitive market. But on the other side, markets where you can create bigger projects. And so therefore, we see it as a strategic view to be in one of these Nordic countries as well.

Okay. My last question, in which countries do you expect project sales in 2023?

In 2023, yes. So first of all, in Romania, this was -- had been postponed, the sale of Romanian solar projects last year. I hope that we now get it in the next couple of weeks finalized. And further projects in Romania, not from last year. On the other side, we see Panama is one target for sale. So 1 project in Panama. And we will see what we can do in other countries, maybe in Italy.

The next question is from the line of Jan Bauer with Warburg Research.

First of all, with regards to the potential sales of the U.S. business. Does this only include projects who are located in the U.S.? Or are also projects included in the aim probably from Canada or also from Panama, so talking about like North America or America as a whole?

Yes, projects in U.S. only.

Okay. With regard to your guidance, can you shed a little bit of light on what do you expect as negative EBITDA contribution from consolidation in 2023. So in the end, what will be roughly the negative margin contribution you expect from the development of your in-house portfolio?

Yes, you see that the margin -- the consolidation is always an effect of internal -- for example, of internal sales, for example, where we do the sales. And internally, we do the work. And then we see that the consolidation is one part of it. So I can't give you the amount, what we expect in this case at the moment. That is related to the sales effects or the effects we have. Certainly, we have an idea about that what would we think when we make our budget and our plan. But just right now, I wouldn't locate it to any event.

Okay. So other way around, how many megawatts do you expect to connect to the grid in the in-house portfolio in 2023?

In the in-house portfolio, we want to finalize projects of another -- so we should be ready with around about 400, 420 megawatts, which should be ready in total. We should want to finalize the projects depending on the delivery times of the machines. So that we have [ about ] 20 megawatts and we have another 100 megawatts under construction.

All right. Regarding the PPA market. So in my perception, the power price breaks in Europe pretty much killed the PPA market so far. How do you see the development now in 2023? Is there some kind of a revival so that you requests for PPAs? Is it again possible to conclude long and short-term PPAs again?

We saw, after the power price break, which we have warned for, that this will lead to an effect on the PPA market. It's happened. The PPA came down. But now we see again a step back that companies, especially midsized companies, would like to have a certainty in the energy prices. So we see something of a 5 to -- 5 years PPAs coming up slowly. But maybe in the future again, the 10 years PPAs will come up again. Our portfolio, we have now a rate of 50%, which is where we have settled the PPAs from 1 year to 3 years and which brings us a positive effect in any case. So we will -- I think the PPA mark will come back. And we saw that the tariff was increased by 25%, so the EEG tariff. And so therefore, we are now talking about the next generation of machines with the 170 class. 170 meters class of rotor diameter. So therefore, there are several effects which are playing a role in this environment related to the prices of PPAs and the energy prices you can offer and which makes sense to offer.

Okay. Absolutely. Two last questions. First thing about the developer margin. So with now increasing yields from the debt side and also there are still ongoing turmoils in the supply chain and higher capital requirements, do you see any pressure on your developer margin? Or do you think you can keep it at least stable?

Yes. So we did a lot to keep the margins high. So in that respect, that we already secured the interest rates. I mentioned it already to the KfW loan. And we already have the prices fixed due to the fact that we ordered now -- 9 transformers last year, 9 transformer station. And now the uncertainty we have in the wind turbine prices. But this is exactly a point where we have to make sure that we take the opportunities from the higher machines and the higher rotor diameters, for the effectiveness. So we will see related to the prices where we will be in the future. So therefore, the first questions I heard here was why are you so careful in the guidance? So one point is the kind of uncertainty in some of these points. But I'm positive that we're having a good, which is very seldom and are ready to build projects or projects which are ready. So -- and therefore, we think the need is high in the market. And therefore, we think we will stick with the margins.

All right. And last question. So there are currently consolidations or at least discussions on EU level to introduce a new energy market design. Something I heard was to [ depart ] Germany in different pricing zones. Do you have any thoughts on that development?

Yes. I think the regulatory issue or the logic behind it is that not only the people who -- they have a lot of renewable energy in their environment, also having to pay additional amounts for the grid extension. So -- and I don't have an opinion on this. On the other side, it is very clear that I think this discussion is huge around it. But I think the effects -- everything what makes green energy cheaper makes sense. So -- and everybody has to think about is how it runs and if it is 2 zones, which are making this possible, then maybe it's a solution. But again, I don't have an opinion on this. It's a general view.

The next question is from the line of Karsten Von Blumenthal with First Berlin Equity Research.

Could you tell us by how much turbine prices on average increased in 2022?

The average price depends all the time from the size, effectiveness and so on. But it had been around 20% to 30%.

All right. That's 1. I have 2 that fits. You proposed usual dividend and a special dividend. Why this kind of a double dividend? Why just did you say we give out EUR 0.08 dividend?

Yes, it's a usual way because it's our standard of EUR 0.04 dividend, and this is standard and then we only want to make sure that everybody understands that the rest is a special one. That's the only issue around that.

So basically, you say that is what you normally pay in the year was quite good. So there is something on top, but we should not regard this as a new standard, the EUR 0.08?

Exactly.

All right. Understood. You had an enormous pipeline increase in 2022. That was a very, very successful year in terms of pipeline expansion. But when I look into 2023, you say in your report that the pipeline roughly remains stable. So is this because you have already anticipated the sale of the U.S. pipeline? Or what has changed so much from 2022 to 2023 that you are so conservative on your pipeline development?

From my understanding, I'm pretty sure that we will exceed the pipeline in the future as well. And we have now a situation, a special situation. I think now everybody now is -- the run on the areas is high who takes now action. And that's what we are doing is the frontrunner and will be and this is the basic for the future business within PNE. I think we will increase our pipeline furthermore, and that's our investment in the last recent years. And we are going to invest in all countries furthermore on this. So from that point of view, I see a further expansion.

So why then is very conservative wording in your report when you are more optimistic?

We have to see maybe there is a -- we have to -- we need to have to look in the report what is written there. You have always to say that, first of all, some project steps out due to the fact that they are going to be build and sold. So we sell projects ready to be built into the market. And if you look to the pipeline in total, it might be that the effect is bigger in the first time. But nevertheless, so it's a summary of all effects maybe. But from my point of view, I see it that our target is 20 gigawatt/gigawatt peak in 2027. We are on the way to achieve that. And I think the value is high for this kind of projects, and pretty sure we will get it done.

All right. You have quite some high pretax profits eliminated in total. The figure in the report is EUR 177 million and for 2022, around EUR 42.5 million because you have created hidden reserves. And my question is how exactly do you calculate this? So you don't sell the project, but you put it into your own plant operation segment. And then you have a sales price, selling price you calculate based on market data, and then you create the hidden reserves or how exactly are these figures, how they're calculated?

The [ reason for ] eliminated earnings, we sell it internally. We sell the wind farm or whatever is in company internally, and then we have to fix the price. This is a conservative price related to the market environment. There is not -- it is not considered any portfolio effect. And it is -- it gives you an overview about that what could be in the market. But we think if we do a sale tender process, maybe there is a -- I'm pretty sure there is a higher potential, especially if this portfolio fixed to get a higher price. Nevertheless, -- this is our -- this is what we looked at the market price in a conservative calculation, and this is that what we would have gotten if we would have sold it internally calculated. This is -- so this is the point of eliminated earnings. We only want to show, and that was the point all the time why we came up with the eliminated earnings. We only wanted to show that it is not related to only to the EBITDA or EBIT, what we really do. And that's one sign for that. And over the years, over 20 years, it goes -- or 30 years, it goes down step by step for each wind farm. It is usual. What they already produced has to be deferred from the eliminated earnings over the time of operation.

So basically, it's the difference between earnings forward, say, 20 years because you own the plants or earnings in 1 year because you sold the plant.

Yes. So yes. So if you have 1 year less results for the EBIT, then the EBITDA -- the hidden reserves or the market price is going to be down, going down. So this is in 2 years is more or less results you can get out of the project. So this is the figures run. So therefore, there is also -- this can particularly can go down year-by-year.

Yes, of course. I think it's an important figure because your earnings potential is, of course, postponed into the future because of the expansion of the own plant portfolio. So you forgo quick profits now to have higher profits in the future. And it is important to tell investors when they understand this business model and the rationale behind this. One last question from my side. We have seen quite some very good reforms and regulatory improvements in Germany. The question is when will we see this starting to work? I mean, we have 12.8 gigawatt in the tenders, but I don't see how this should be subscribed. We had a significant under subscription in the first tender. And what do you think when you will feel that all these reforms done and what will come in the future will have a significant effect on your business.

Yes, we see that the government, especially in the -- they are doing a lot in this respect to lower permitting times and so on. But if this is really working, we will know when we work with these regulations, what we see that is that on the lower levels of the government in the departments who have to decide of the permitting -- for the permit, they don't have any regulations in detail. So therefore, there is a lot of uncertainty in this case. So we are not calculating in our planning just right now that we reduce, for example, permission times. So -- but we work on this to get this -- to follow up on these regulations and then work and work with the local authorities on this to make it happen following these kind of ideas. What we see on the other side is that the interest is high in the regions to increase the areas to be reserved for wind or the photovoltaic power plants.

Right. And that is, of course, very helpful because this is the bottleneck. We need the sites to install and interest has increased. That is a very good sign for coming years.

There are no further questions, and I hand back to Markus Lesser.

Yes. Thank you for joining this session, and I wish you a good day. See you soon. Bye.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephones. Thank you for joining. Have a pleasant day. Goodbye.