Welcome to Neoen's H1 2022 results call. At this time, all participants are in listen-only mode until the Q&A session. To ask a question, please press star and then the number one. This call is being recorded. If you have any objections, you may disconnect at this point. Now, I will turn the meeting over to your host, Xavier Barbaro, Chief Executive Officer, joined by Louis-Mathieu Perrin, Chief Financial Officer. You may begin. Thank you very much, and good evening. I'm Xavier Barbaro. I'm the CEO of Neoen. Welcome to our H1 2022 results conference call. I'm together, as you said, with Louis-Mathieu Perrin, our CFO, and Delphine Dey, our IR officer. We will first comment on the key points of our publication, and our comments will be following the slide presentation that you have hopefully received, and which is also accessible through our website. As always, we will then open the floor to questions. Let's start with the key highlights on slide 4 as an overview of the H1 2022. We continue to show growth, both in terms of capacity and in terms of financial performance. As for the capacity part, we have reached 5.6 GW of assets in operation or under construction. On top of that, we added 3.4 GW to our total portfolio. As for the key operational and financial indicators, we produced more than 2.8 TW hours of electricity during the semester, which is an increase of 18% year-on-year. The adjusted EBITDA reached € 175 million, up 39% year-on-year. We will come back on this in more detail in our presentation. We generated € 168 million in cash flow from operations, which is up 23% year-on-year. On slide 5, in more detail, H1 2022 revenue was up 36%. As you already know, our Q1 2022 revenue was up 36% year-on-year. We also had a good Q2, with revenue up 36% year-on-year as well. H1 2022 adjusted EBITDA was up 39% to € 175 million. All business segments contributed to the strong growth, and our total portfolio came to 17.3 GW at the end of June 2022, up 3.4 GW versus the end of 2021. Secured portfolio in particular reached 6.3 GW at the end of the period. If we now move to slide 7, you will have a quick overview of the dynamics within our secured portfolio. We have secured in H1 242 new MW in a newly awarded project. I will come back on this shortly. In the meantime, we launched the construction of 128 MW, including notably Storbrännkullen in Sweden for 57.4 MW. That's our first asset in Sweden. Björkliden in Finland for 40.4 MW. We also commissioned 103 MW of new solar, wind, and storage assets in France and in El Salvador, and at the end of June 2022, we had almost 3.6 GW in operation. If you now turn to slide 8, we continue to expand our secured portfolio, adding 242 MW of awarded projects, as I said, in H1, in France, Ireland, Sweden, and Finland. Of which 143 MW in Q2, with, in particular, 80 MW one in the solar governmental tender in the Republic of Ireland. 57 MW of wind in Sweden, that's the Storbötet Wind Farm, which is Neoen's first farm in this country, and an additional 5 MW of Björkliden. We just launched the construction of the wind farm with a final capacity of 40 MW. This project is underpinned by a 10-year PPA with Equinix for which, for 85% of the generated electricity, which was already recorded in 2021. Regarding, by the way, more recent successes, we were happy to announce in July the signature of a second PPA with Equinix, again in Finland, for at least another 42 MW of wind energy. As you can see on slide 9, we won 80 MW, 8-0, of solar projects in Ireland through governmental tender in the Q2. These are 2 solar farms of respectively 61 MWp and 19 MWp due to be built and to be operational by the end of 2025. These projects, these assets will further strengthen Neoen's portfolio in Ireland, which already includes 53 MW of wind farms in operation and 58 MW of solar plants in operation or under construction. On slide number 10, as we mentioned earlier, Neoen launched the construction of its first asset in Sweden with a capacity of 57.4 MW. The project is due to be commissioned in late 2023. Neoen intends to sell a significant part of the electricity generated through power purchase agreements. This is Neoen's first asset in Sweden, where we have developed a large portfolio of projects over the last couple of years. On slide number 11, let me give you more details on the commissioning of H1 2022. We added 103 MW of assets in operation in H1 in France and in El Salvador. In France, that's 2 wind farms, Madon, Moselle, and Saint-Sauvant, with a total capacity of 60 MW, 3 solar farms with a total capacity of 38 MWp, and one battery in El Salvador for 6 MW. I now hand over to Louis-Mathieu to comment on our operational data and results. Thank you, Xavier. Let's now move to slide 13, where you can see that power production was up 18% compared to H1 2021. We generated 2.8 TW hours over the first semester. The average solar availability rate was down to 92%, due specifically to technical difficulties encountered at the El Llano solar plant in Mexico. If we exclude this solar farm, solar availability rates stood at 99% over the period. The average wind availability rate was slightly down compared to last year at 96%. Turning to load factors, the average load factor of our solar assets improved to 20.9% compared to 20.1% in H1 2021, which is due to the positive contribution from Altiplano in Argentina, which has been commissioned at the end of 2021. I remind you that Altiplano has a higher load factor than the average of our assets in operation. This positive contribution of Altiplano, however, was partly offset by low irradiation conditions in Australia over the period. Regarding the average load factor of wind assets, it decreased to 30% compared to 31.7% in H1 2021, as a consequence of unfavorable wind resources in Europe, notably in 2022. If we turn to revenue on slide 14, we achieved € 224 million in revenue in H1 2022, up 36% year-on-year. This increase was largely driven by asset commissioning in 2021 and also in H1 2022, and also to a lesser extent by the early generation revenue, which we recorded in H1 2022. The overall price effect was positive, reflecting a combination of higher price for the Bulgana wind farm. Following the start of its PPA in December of 2021, the price of this PPA compares to the low average market prices at which the plant was selling electricity in H1 2021. We also benefited overall from higher market prices in Australia and in Ireland in H1 2022 compared to H1 2021. The volume effect was slightly negative in H1 2022, as we had lower irradiation condition in Australia. The storage revenue benefited from a good performance of the Yllikkälä battery in Finland and also from a good performance of HPR in Australia. As you can see, the decrease in revenue, which is linked to last year's farm-down transaction, was pretty limited. Finally, as for revenue, we had a positive Forex impact in H1. At constant FX rates, revenue was at 32%. If we now turn to slide number 15, before commenting our H1 results in more detail, I would like to explain the rationale for adjusting our key performance indicators. Within our secured portfolio, we have entered into medium and long-term power purchase agreements with commercial counterparties, which are known as corporate PPAs, CPPAs. Some of these CPPAs qualify as derivative financial instruments according to IFRS 9 and have to be fair valued. Given the forthcoming entry into force of several financial CPPAs, which are related to Mutkalampi in Finland and Western Downs in Australia, which have both started producing electricity at limited capacity in H1 2022, we recognized for the first time this semester the change in fair value of energy derivatives associated in our P&L in other current operating income. In 2021, no fair value of energy derivatives was recognized in our P&L. Mutkalampi and Western Downs were not producing electricity at that time. Given its intrinsic volatility, which is fully beyond the group control and is also non-cash, and in accordance with market practices, we have decided to adjust in our financial communication, EBITDA, EBIT, and net results for the change in fair value of energy derivative. In H1 2022, this change in fair value of energy derivative amounted to a negative impact of € 29.7 million, partly offset at the net result levels by a corresponding positive tax effect of € 7.3 million. Consequently, as we could not anticipate any change in fair value of energy derivative in our EBITDA guidance, for the reason which are obvious and which I just explained, we are now adopting and communicating on an adjusted EBITDA guidance. Having said that, if we move to slide 16 and review our adjusted EBITDA, it was up 39% year-on-year to € 175 million. This increase was mainly driven by the contribution from asset commissioning in 2021 and in H1 2022. Also, the Liquidated Damages, sorry, recognized in H1 2022, mainly in Australia. These positive items were partly offset by the lower contribution from El Llano in Mexico in H1 2022. As you may remember, we had a high base of comparison in H1 2021. The PPA took effect on July 1, 2021, rather than late June 2020, as initially anticipated. As a consequence, the electricity generated over the period had been valued at market prices. There was no contribution from farm down in H1 2022, as in H1 2021, but we are expecting a contribution in H2 2022. Indeed, we announced this week the signature of an agreement to sell 95% of our shares in the Saint-Sauvant Wind Farm to Sorgenia, a long-standing partner in the development of the project, on the basis of an EV of € 65.5 million. The capital gains derived from the sale, which will directly contribute to the adjusted EBITDA, is expected to be in the order of € 15 million. The transaction remains subject to the usual conditions precedent, and is expected to be completed by the end of the H2 of 2022. If we now look at the breakdown of our performance by segment, and we start with solar on slide 17. Solar revenue increased by 17% and adjusted EBITDA was up 21% at € 88.7 million, due to the strong contribution from assets commissioned in 2021, essentially in Argentina, with Altiplano, and to a lesser extent, in France. Recognition of liquidated damages in Australia as a consequence of delays in construction, and these 2 positive effects were partly offset by the lower contribution of El Llano, which I already explained. If we now turn to wind on slide 18. Wind revenue was up 28% and adjusted EBITDA increased by 36%, thanks to the contribution of assets commissioned in France in 2021 and in H1 2022. Also we benefit from the higher contribution from Bulgana compared to last year for the reasons I already explained. The fact that the PPA price on average is higher than the market price which the plant benefited from last year. We also benefited from a volume effect as a consequence of the COD reached at the end of 2021. Finally, we also benefited as for the wind segment from a partial exemption of penalties historically recognized under our PPA in Australia. If we move to storage on slide 19. Storage revenue almost tripled, and adjusted EBITDA more than doubled over the period. We benefited from the contribution of the VBB, which was commissioned in December 2021. In Q1 2022, we mainly got the seasonal revenue earned from the capacity reserve contract with the Australian regulator, which came into force during the Australian summer. In Q2 2022, the battery has also actively supported the grid in a volatile environment. On top of the contribution of the VBB, we also benefited from the good performance of HPR in Australia, as well as the Yllikkälä battery in Finland, which expanded its sales of network services to several markets during the first semester of 2022. We also benefited from favorable market conditions. On slide 20, you can see the breakdown of our revenue between merchant and contracted. In H1 2022, total merchant revenue represented 25% of consolidated revenue, which is a result of the contribution from energy arbitrage operation performed by the VBB and also HPR. The good performance at Ilika in Finland, and also higher market prices in Ireland in H1 2022 versus H1 2021. Finally, early generation revenue in France. However, when you look at cumulative generation revenue, meaning wind plus solar, the merchant proportion was only 13%. If we now move to our P&L on slide number 21 and focus on below adjusted EBITDA items. Adjusted EBIT was up 42%, direct consequence of the increase in adjusted EBITDA. Depreciation, amortization, and provision increased, but this is in line with the growth in the volume of assets in operation. Moving to non-current items. In H1 2022, we booked a € 13.8 million impairment on our Metoro solar farm in Mozambique. The local security situation suddenly deteriorated in June 2022, and we had to suspend the construction of the solar farm, with no visibility on the timing when construction operation will be able to resume. As far as our cost of debt is concerned, it increased by 23%, which is a direct consequence of the growth in the number of assets in operation. This despite the impact of the progressive repayments of historical project finance debt. Our effective adjusted tax rate was up to 89%, sorry, versus 66% in H1 2021. We'll come back to this into more details in the following slides. As a consequence, our adjusted net income group share amounted to € 1.4 million versus € 4.5 million last year. Our consolidated net income, which includes the impact of the fair value of energy derivative financial instruments, net of tax, is presented in the appendix to this presentation. If you focus on our tax rates on slide 22, you have the details of our adjusted effective tax rate, which was impacted by tax consequences of FX impact, inflation and hyperinflation in Mexico and in Argentina, which you now get used to as they tend to repeat each semester. Also, as I've already mentioned, most of it is largely deferred. You also have the difference in tax rates between Neoen and other countries, for example, Finland. Overall, you have the impact of the non-recognition of deferred tax asset on the Metoro impairment. For obvious reasons, we did not recognize deferred tax assets on this impairment. If we strip out the Metoro impact, as you can see on the chart, the adjusted tax rate would have been much closer to our standard tax rates. If we turn to the cash flow generation on slide 23. Cash flow from operations amounted to € 168 million in H1 2022, which is a €32 million increase compared to H1 2021, which is largely driven by the increase in EBITDA. We also had a positive working capital contribution, but much lower than last year. Turning to the investment, we continue to invest over the period with more than € 639 million of CapEx across major regions, including Kaban, Western Downs, Goyder in Australia, and Mutkalampi and Storbrännkullen in Finland and Sweden, and also several solar and wind assets in France. Turning to our net cash flow from financing activity, it reached € 422 million, mainly reflecting the net increase in borrowing predominantly through non-recourse project financing. As a result of this move, the group's cash balance stood at € 559 million at the end of June 2022 versus € 593 million at the end of December 2021. Turning to slide 24. Our growth debt totals € 3.5 billion at end of June 2022. This is up more than €5 million compared to the end of last year. We had a net increase in borrowing of € 472 million, which is mainly due to additional project financing raised with the construction of new assets. Increase in forward markets interest rate globally led to a positive impact on the fair value of our interest rate derivatives, which is obviously the reason why we hedge ourselves. As a consequence, a decrease in gross debt, which includes interest rate derivative liability and assets. The average cost of project finance debt was slightly up at 3.9% versus 3.7% at the end of 2021, due to higher interest rates in H1 2022, which have affected the uncovered portion of our project financing. Even so, this portion remains very limited, with more than 75% of our floating interest rate exposure on project debt, which is swept, and we saw that with the efficiency of our interest rate derivative. Overall, the group average cost of debt increased slightly at 3.6% versus 3.5% at the end of 2021. Of course, we continue to have more than 80% of our debt, which is non-recourse, with long average tenure. Finally, turning to net debt, on slide 25. Our net debt went up by € 382 million- € 2.6 billion. Overall, the net debt to adjusted EBITDA ratio remains stable at 7.5 x as a consequence of the increase in our 12-month rolling adjusted EBITDA. Of course, and as I repeat it constantly, we continue to stick to a very strict financial discipline with project finance debt showing long tenure of 15.6 years on average, and the debt remaining denominated in the same currency as the cash flow of our underlying PPA contract, providing a form of natural hedge, something we do not intend to change in the future. I now hand over the floor back to Xavier for the rest of the presentation. Thank you, Louis-Mathieu. Let's now move on to slide 27 and review our pipeline. Our capacity in operation and under construction total 5.6 GW at the end of June 2022, and our total secured portfolio reached 6.3 GW. Overall, including the advanced pipeline, our total portfolio reached 17.3 GW. This represents an increase of 3.4 GW compared to the end of December 2021. Please note that our pipeline continues to be well-distributed between a significant number of projects that are spread across different geographies. The strong increase in our total portfolio demonstrates our ability to continuously feed our pipeline with new projects in advanced development. It's in line with our guidance to add at least 2 GW of newly awarded projects per year by 2025 onwards. We are therefore well on track to reach our target of more than 10 GW of assets in operation or under construction by the end of 2025. On slide number 28, we give you the latest status on our 2 GW of assets under construction at the end of H1 2022. As usual, this map shows our current best estimate of expected CODs. Let's go quickly through our main projects. In El Salvador, one of the 2 batteries launched in 2021 is now operational. The construction of the second one, Albireo Power Reserve, is moving on, and the COD is now expected in Q3 versus Q2 previously. In Australia, we still have 4 plants under construction that are running according to schedule. The COD of our large solar farm, Western Downs, is still expected in Q4 2022 or in Q1 2023. Other Australian projects, which include the 2 wind farms, Kaban and Goyder South Stage 1, as well as the Capital Battery in Canberra, will be commissioned in 2023 and 2024. Regarding the Metoro solar project in Mozambique, as previously explained, the situation suddenly deteriorated in June 2022. All the teams mobilized locally were evacuated, and the construction work was suspended for an indefinite period. It's a minor project, but it's still something that we regret, but that was the correct decision to take, with limited impact. In Finland, Mutkalampi wind farm COD is still expected in 2 stages, so first one at the end of 2022 and second one in H1 2023. In the same country, we launched in H1 2022 the construction of the Björkliden wind farm, the COD of which is expected in 2023. In Sweden, we announced during the Q2 of 2022 the launch of construction of our first asset in this country. The COD is expected at the end of 2023. In Ireland, among our 3 solar farm projects, Millvale started injecting electricity into the grid, and COD is expected in the H2 of 2022. The 2 other farms are still under construction, with COD also on course for the H2 of this year. Finally, in France, we currently have 133 MWp of solar capacity, 95 MW of wind capacity, and 16 MW of storage capacity under construction. These projects should be commissioned between 2022 and 2023. Before moving to the Q&A, let me comment on our 2022 guidance. This is slide number 29. We are upgrading our adjusted EBITDA guidance to between € 380 million and € 400 million compared to a previous range of € 360 million- € 375 million, with an adjusted EBITDA margin now expected between 80% and 90%. This upwards adjustment reflects the performance observed in the Q2, in particular for the storage business, notably in Australia, the pace of progress of the projects under construction and a favorable market price environment. These adjustments to our EBITDA guidance is based on the group's latest expectations concerning the likely commissioning date of our assets under construction and our current view of market price trends. I would like to remind you that the switch from an EBITDA target to an adjusted EBITDA target is completely neutral, since the group only started to recognize the change in fair value of energy derivative financial instruments from the H1 of 2022. The upward revision of our 2022 targets is therefore absolutely not linked to this, accounting adjustment. It takes into account capital gains from expected farm down transactions, the contribution of which will not exceed 10% of 2022 adjusted EBITDA. And you know that we have the limit of 20% as communicated in the capital market day last year. This year should not be more than 10%. If you turn now to slide number 30, we confirm our target of more than 5 GW in operation in the course of 2023. We also confirm our target to reach at least 10 GW in capacity and operation, under construction by the year-end 2025. Finally, we also maintain, despite this upward revision of our EBITDA guidance for 2022, we maintain our target of a double-digit annual growth in adjusted EBITDA between 2022 and 2023 and onwards to 2025. These targets take into account our current best estimate of the timetable for the completion of our projects. This is the end of our opening remarks. We've been very happy to share with you those detailed information about our good set of numbers. As you have seen, Neoen continues to grow its EBITDA. We continue to grow our portfolio quarter after quarter. In doing so, we've been further expanding our footprint, particularly across Europe. That's already Finland, France, Ireland, Sweden, Portugal, and more to come. Thank you for your attention, and we are now ready to take your questions. Thank you. We will now begin the Q&A session. To ask a question, please press star followed by the number one. Please unmute your phone and record your name clearly when prompted. Your name is required to introduce your question. To cancel your request, please press star followed by the number 2. One moment, please, for the first question. Speakers, our first question comes from Vincent Ayral. Your line is open. Excuse me, Vincent, your line is open. Please check if you're on mute. I think, Vincent, that you are on mute. You are speechless with the good numbers. You were not expecting this. Excuse me, speakers, one moment, please. Speakers, I apologize. Vincent's line disconnected. I'll go ahead and proceed with our next question. Our next question comes from Arthur Sitbon. Your line is open. Hello. Thanks for taking my question. I thank you very much for the clarity on the message for EBITDA in 2022 and the year beyond. I mean, my understanding is that basically you're saying that for 2022 you'll have an adjusted EBITDA of minimum € 380 million and minimum € 420 million for 2023, just to check that I understand correctly on that. I was wondering if you could help us a bit with the lines below the EBITDA line, down to the net income. Consensus is at €60 million for 2022 and €80 million for 2023. I was wondering if you are comfortable with that. My second question is just on asset rotation. You're talking about 10% of your total EBITDA maximum now instead of 20 in the past. Is it a change of strategy? Do you think you can achieve more growth, basically with your current balance sheet without doing further asset rotation, or is there less appetite for those operations that would help? The last question is just I was wondering if you will be forcing the conversion of your convertible with a 2024 maturity in the next few months. Thank you very much. Thank you also for your questions. The first one, that means indeed more than € 380 million in 2022 and hopefully up to € 400 million. Since we will have a double-digit growth between 2022 and 2023, that means that in 2023 we expect to have at least € 420 million of EBITDA. Of course, we will get back to you with a more precise guidance in February 2023. That will be the proper timing to come with more precise numbers for 2023. We can already again state or guide towards something that will be upwards of € 420 million for next year. On the lines below the EBITDA, we'll take that one, but maybe I will comment on or answer your last question on farm down. We keep the, let's say, the message that we gave last year at the capital market day. There will be some farm down every year. It will not be more than 20% of the given year's EBITDA. It happened that in 2022 we thought that it would be useful to give you the precision that for this year it will happen to be no more than 10%. It's not, believe me, because of a lack of appetite for farm down. I mean, our assets are obviously very sought after. It's just the pace at which we work on those matters. It's public information now that we have signed a first deal, even if it's post June 30, 'cause it was the case in July, but we have just signed a very nice transaction. And we'll see if there is something else before the end of the year. It may not be the case, but we are working constantly on potential farm downs, even if it's not Neoen core business. It may just happen that it goes from one quarter to the other. That's something that we believe in 2022, again, will be no more than 10%. We'll see how it goes next year. Louis-Mathieu on EBIT and Yeah. And the like. I can give you some a bit of guidance on D&A and financial results. On D&A, we should be landing between € 145 million and € 150 million. It's an expense. On financial results, we should be landing around €145 million. Again, it's an expense. Below those items, it's always very complex. We posted this impairment on Metoro and I'm not able to tell you what will happen by the end of the year, will the construction resume or not. You should take into account the fact that we booked it in H1. At the moment, the guidance. Lastly, on tax, it's always something very complex to model and I apologize for that. We have some deferred tax impact, which are repeating themselves from one semester to the other, which are linked to the exposure that we have, for example, in country where there is some hyperinflation. Other than saying that the tax rate that you see on the slide stripping out the Metoro impact is something which makes sense. It should help you in the calculation. Other than that, I really struggle to give you a firm number. That's really the guidance I can give you at the moment. You had the last question on the convertible bonds, and the only thing that I can say at the moment that we are assessing our options. No specific decision has been taken. We know that we are currently in a situation where the soft call condition is met, so it's a decision we'll have to take, but as of today, no decision is taken yet. Thank you very much. Thank you. Our next question comes from Juan Rodriguez. Your line is open. Hi. Thank you, and good afternoon. Thank you for taking our questions. I have a couple on my side. The first one is on Liquidated Damages in Australia. Can you please remind us what was the amount of this? If there are any additional one-offs that you expect on H2 or that are included within the guidance? That's the first one. The second one is on the Mozambique impairment. Is this mainly the equity portion or on the project I expect, I guess. What about the debt of the project? Can you please remind us who holds the debt and what's happening with that? The third one that I have on my side is, can you please remind us what is the percentage of your PPAs that are indexed to inflation? Thank you. Thank you, Juan, for those questions. First one, the LDs in Australia. I mean, there are LDs, let's say, in the life of Neoen, LDs that are owed to us by suppliers who are late. Some LDs that are owed by Neoen to offtakers because we are late because of the delays in construction. It happens semester after semester that we work on those matters and hopefully find some good solutions, and that was reflected in the H1 of 2022 in Australia for Bulgana. No, not for. Sorry. Some with Western Downs. Bulgana was a problem of the past. Western Downs that we have included some adjustments in those LDs in our accounts, but that does not play such a significant part. Again, the good performance in terms of EBITDA in the H1 was because of, let's say, pure electricity factors more than anything else. In Mozambique, the debt, it was coming from Proparco, so the French development agency. We have obviously a good relationship with Proparco, including in tough times. Working with them a lot in Latin America. Of course, we've been in touch with them when we had to make the decision of evacuating the site. The fact that we do some write-off from this investment is our own business, but we are working hand in hand with Proparco to see what we can do in terms of hopefully someday completing these plans. At the moment, on our side, we have decided to write the main part of our investments off. Your third question was? Commercial risk. Oh, yeah. That's a number that has not changed, or that may change in the future, but at the moment, there's roughly 70% of our secured capacity, which is fully indexed or partially indexed to inflation. When I'm saying that, it may change in the future, we will try, as often as possible, even more than today, to have, of course, inflation factors in our PPAs. 70% today, 70, and potentially more, potentially even more in the future. Just to complement what Xavier said, on the material impairments, what we have written off is the vast majority of the equity that's injected in the project. Perfect. Quite clear. Thank you. Thank you. Our next question comes from Henry Tarr. Your line is open. Hi, Jacob. Hi there. Thanks for taking my question. 2 or 3. One is, you went through the project, et cetera. What’s your best guess at where you might be at year-end in terms of capacity at this point? Then, secondly, could you just explain if you can, the derivative movement to me, just so I get a sense of what it is, you know, how the share value is coming up at a negative €40 million? That’ll be great. Thank you. On the derivative, Louis-Michel will answer, but just to better understand your first question, what do you mean in terms of capacity at year-end for the operation or on the construction part? Yeah. Operational capacity at year-end. I guess you're gonna be at 5 GW fully operational by year-end 2023. Where do you think we might be by year-end 2022? No, it's. By the way, it's not by year. Well, it would be by definition by year-end 2023 because we have said that we would reach 5 GW over the course of 2023, but hopefully that will happen before December. I think that in the past, and that is still true, we have said that we would have typically 90% of our 5 GW in operation. So let's say 4.5, 4.6 GW should be fully in operation at the end of 2022. The consequence able to, for the natural part, capture the good prices that we see at the moment. Do expect 4.5, something like that, GW fully in operation at the end of 2022, and more than 5 GW during the course of 2023, but that will happen before year-end 2023. On the derivative, it's pretty simple, because this is a trend that you shall observe across the board, I think. Historically, the corporate PPAs which were signed were essentially physical, and we started to sign financial contracts, so notably, in Finland, we announced, in December 2020 the fact that we had signed virtual PPAs with Dutch counterparties. Basically, we are selling a financial product, and we have the same thing in Australia with the Western Downs solar farm. We are selling through ISDA, which is a financial product. As a consequence of that, as the contract is not physical contract, but a financial contract, we have to fair value them. As those plants have started operating, we had no other choice than regarding this impact in our accounts. The way the fair value is calculated, it's pretty simple. It's the change in the value of the underlying contract before the time when we sign it, so end of 2020, for example, for Mutkalampi, and the value at the end of June 2022. For that, we run internal model, which are based on capture prices for capture prices for wind and solar assets. This is the way we run it and we book it in our accounts. It's really linked to the fact that we have entered, and we will continue to enter in the future into purely financial products with no physical delivery of the electricity. Okay. That's very helpful. Thank you. You're welcome. Thank you, speakers. We have 4 questions in queue. As a reminder for our participants, if you would like to ask a question, please press star followed by the number one, and record your name. Our next question comes from Paul Chedron. Your line is open. Just one moment. We don't hear you very well. I'm sorry, speakers. Our questioner's line disconnected. Okay. Again, for our participants. Yeah, wait. Mm-hmm. If you would like to ask a question, participants, please press star followed by the number one. Please record your name when you are prompted. Thank you, and one moment please as we wait for a question. Speakers, we have one question in queue. Our question comes from Philippe Ourpatian. Your line is open. Yes, good evening to all of you. One additional question concerning derivative. As you mentioned that you're gonna sign, let's say more and more, financial contract versus physical deliveries contract, does that means that. As these contracts are purely operational, means that it's not a one-off, but it's gonna be something which in the operation, what gonna be the trend of those derivatives? It means that, the consensus is expecting, selective number, regarding your net profit for 2023, 2024, 2025, et cetera. What's gonna be the trend, and this means that we have to, lower, even if it's non-cash, we have to lower our expectation based on this, new way to make the business starting, last year. Thanks. It shouldn't be different from what you do with other big utilities. If you look at what RWE, E.ON or ENGIE, for example, are doing in the way they communicate, they strip out the impact of the fair value of derivatives systematically. Yeah, it's non-cash. It's clear. It's a pure accounting impact. The only thing I can say is that the way it will go is very simple. When prices on the market increase, the fair value tends to be negative. When prices on the market decrease, the fair value tend to be positive. The change in fair value will be highly correlated to change in the market prices, because you have to compare the intrinsic value of the contract with the market value of the contract. As you have signed at fixed price, if market price increase, the fair value is negative. If market price decrease, the fair value is positive. It's very simple, but it's almost impossible to give any guidance on this because I don't know where prices will be at the end of the year or next year or the year after. It shouldn't be any issue for you, considering the fact that others are doing it for many type of energy derivatives and not only renewables. Business-wise and value-wise, I mean, again, it has no impact. Yeah. For us. It's just, I mean, we- Purely accounting. We apply IFRS, but it's really I mean, we are switching to adjusted EBITDA precisely to neutralize this purely artificial effect on our accounts and just leave you with the numbers that relates to our business and to the value that we create for everyone. Mm. Okay. That's correct. Just to be clear, I understand the mechanism and the impact, positive or negative, you may have on your account. The thing is that when you are looking at the P&L you disclose and the adjusted one, means that there is on one part something which is affected or regarding the adjusted by the impairment you have taken on the Mozambique issue. The second thing is that looking at the disclosed P&L were quite negative. That's the reason why I was wondering if you are trying in your next communication maybe to really well separated adjusted and the moving parts in order to not letting the market have some bracketed disappointment regarding the net figure you're gonna disclose. That's why my- The- That's my concern. The net figure is the adjusted one. I'm not sure to get your point, actually. If you look at the accounts of many utilities in the space, it's exactly the same situation. Yeah. So it's- The impact in terms of magnitude is, I mean, when you are Iberdrola, when you are Enel and so on, we are discussing about a bill, let's say- Yeah, millions. Millions of EBITDA. Yeah. The sensitivity of Neoen is a little bit bigger, looking that you swing from, let's say, somewhere around € 14 million retreated from the the- Mm-hmm The Mozambique one-off to -€ 21 when you present your account. That's just my take. Just looking at Yeah, you have to take into consideration that when you sign a 10-year virtual PPA, you have to mark to market it for its entire value, and not just for 1 year. Yes, I know it. So. No, I know it. Just to not see the market being surprised by some swings between what you're gonna disclose and the adjusted figures. Just to be clear. Yeah, okay. Understood. I think the market should concentrate on adjusted figures. You're right. That's my take, too. Yeah. Thank you. Our next question comes from Vincent Ayral. Your line is open. Hi, everyone. I hope you can hear me, and I won't be dropped out of the line for a third time. Forgive me. Yeah, we can hear you, Vincent. No problem at all. You can. Fine. That's good news. For some reason, I got dropped like 3x out of the call, so I haven't heard everything on the Q&A. Apologies for that. I've done that to several folks, so I suspect there may have been an issue on the call itself. I have a few questions. I hope they have not been asked. The first one is regarding the merchant exposure. Yes, you have some merchant exposure battery and U.S. But when we look here, the reasons for the guidance upward revision, and you basically say as well, favorable market price environment. You flag, I think, page 20, early generation revenue increase. I was a bit interested by that because we know that some renewable developers have had the opportunity here and there not to start, for example, the CFD tariff for a few months after commissioning and actually sell at much higher market prices. I would say that would be one question here understanding if on the renewables, not the batteries, but on the renewables themselves there are some assets here we should be aware about merchant power exposure. The second, especially in Europe. The second question, it's very related. It's actually France. France is looking at accelerating the energy transition. Actually they're thinking about potentially allowing renewable developers to sell at market price at first for a transitory period. We don't have the details there, but that could be something very interesting for developers like you who are present in France and having a project out there. Could you give us more color on exactly what are the plans and which projects could potentially benefit from that, given your commissioning plans? The second question is very simple. The third is, we've seen massive fires in southwest of France, so you got some assets or sites there. I suspect it's not that, but you have as well a Horizeo project being developed. It's just to understand if this could generate any operational issues. I'm talking about potential delays to commissioning. I mean, I understand in the south of France, actually, at the moment, you cannot even go into certain areas of the forest. Just walking is even prohibited. Does it generate problems on your side regarding, among other things, more than solar or other projects? Thank you. Thanks very much, Vincent. I suggest that I take the questions apart from the first one that we make sure we put the answer. Yeah, no problem. On H1 2022, the merchant exposure, you were mentioning the fact that some projects can sell on the market before starting their PPA was pretty limited. Actually it's really a couple of million EUR, so pretty limited contribution. In H2, we have a number of projects which will be ramping up progressively. So the main one will be with Mutkalampi in Finland. You have also the Western Downs project in Australia. Definitely our expectations for the year takes into account this progressive ramp-up and the current market price environment. On the early generation question, yes, that's something that we have in several countries. It's not something new. We have always had that, for example, in Australia a few years ago. We now have that as well in Europe, for example, in Finland or in France, as you were asking. There will be some early generation because we have assets for the construction of which is progressing well. We will capture some early generation revenues before the start of the PPA for PPAs that we have signed ourselves. On France, in your specific questions, the government, for governmental PPAs that's used to start on the very first day of the COD, is now ready to allow to have 12, maybe 18-month value generation revenue. To postpone the start of the PPA or the feed-in tariff in a way, one year to one and a half year post-COD to let's say, to give some oxygen to some projects that have been struggling with increase in CapEx and financing costs. It's good news for sure, but it's also here to lower the pain that we are leaving as well as most of our competitors, obviously. Probably even more on their side, with some projects that are not so easy to build and finance. We do not have full clarity there. What we expect to hear in the coming days or weeks from the new government is something that should be around 12- 18 months of early generation revenue for projects in France. Having their construction starting in 2023 and 2024, and obviously in 2022. That's something that the market expects, but again, no certainty there. On fires, no, we have not been touched. Let's say 2 things. I mean, it may happen. Of course, fires can happen everywhere. We do believe that our assets are well insured. At the same time, we still prefer to have them running than to have them reimbursed. We have not been touched at all, and we are quite active in France, not only in the southwest, but also in the southeast. You know, the Landes forest in southwestern France is huge. We are not touched at all for any of our plants by the current fires, because it's the recent past. I think it's properly managed now. Okay. Thank you very much. Just one comment I would make is on the question number 2, the French one on the plan. If they allow one and a half year selling at market prices, knowing that market prices are like 10x normal prices, it seems more than an offset for any you know technical issues and CapEx improvement. The level of the power prices are just so massive. One and a half year of merchant exposure in the current context is a massive upside for anyone with a project. Well, it's massive relief in a way, 'cause again, increases in CapEx and OpEx and financing costs have been pretty brutal. Do not expect the French government to be overly generous. No worries, they have made their calculation, and what they are considering to give is well calibrated to offset some of the costs that we as a sector have to live with. There will not be a crazy profitability. It's just going to offset some substantial pain that we have to live with, because those projects were won a couple of years ago with a totally different set of hypotheses than what we are seeing today. On top of that, I know that there are some spectacular spot prices in France, but the captured price by a solar farm in particular is significantly different from the spot prices that you see or from what you see on markets. Let's say the Cal '23 is calibrated on baseload, and intermittent solar energy will be what? 30%-40% lower than that. It's still good enough, of course, and again, it helps offset some CapEx increases and financing costs increases, but it's not as high as what you can see on spot markets and EPEX. Okay, thank you very much. Thank you. Speakers, we have 4 questions in queue. Our next question comes from the line of Paul Chedron. Your line is open. Yes, good evening. Thank you for taking my question. I hope I won't get dropped this time. My first question is on Australia. I think power prices remain extremely high and volatile in the country so far in July. Is it fair to assume that your storage assets could keep recording high revenue from that, at least in Q3? And also looking further out, if the current trend continues throughout H2, will there may be room for even higher full-year EBITDA from that? The second question, still in Australia, on Western Downs, you mentioned that everything is going according to schedule. Have you finally received all permits? Because I think last time we talked, you still had to receive the majority of them. Last question on the Björkliden. I hope I got that right, the Björkliden farm. When you signed the PPA, you expected construction to start in 2023, and eventually, you could start construction much earlier than that. I'm just curious, what made that possible, and is that something that can be replicated for other assets? Thank you. Thank you for your question. On the first one, so let's say the business model of storage in terms of what P&L is made is somehow de-correlated from spot prices. I mean, you can make good money with storage even with low spot prices, and symmetrically, the fact that spot prices are super high does not necessarily mean that your storage will be helpful to the market. I mean, let's say we play a helpful role when the grid is unstable, which is not necessarily correlated to. It's not uncorrelated either, but it's somehow independent from what's happening. We have made a good H1 of 2022 with our storage. We do not specifically expect a good H2. I mean, it may happen, but that's not something that we have specifically in mind, or at least the fact that spot prices are very high in Australia, as you pointed out, does not mean that we have high hopes for our storage P&L in Australia. On the power generation part, that's a different story obviously, 'cause it's fully correlated. The capacity that we have in Australia that is sold on spot market will benefit for sure. There is some wind, there is some solar from those high prices, but that's already included in the forecast or guidance, revised guidance that we gave earlier. May be even better, it may be lower than that. That's, by definition, unpredictable. That will play a role, but that's already accounted for in the guidance that we gave. For Western Downs, the modules, they have not all arrived on site. This part has arrived. We have also received confirmation that the part that is not yet in Australia had left China. It's obviously a major step. There is just a remaining few percent that the status of which is not confirmed yet. I think that the problem is behind us from the documents that we have seen, which are pretty serious ones. On Bjerkreim, yes, we have been faster than expected. Let's say that we try as often as possible in the current context to accelerate the start of construction of our assets. It's not always easy because sometimes, I mean, you still need to obtain some permits. We do have the impression, especially in Europe, that the authorities are willing to help when it comes to permitting connection, et cetera, but it's still a complex process. You obviously have the supply chain matters that everyone has. Even if you want to start earlier, it's not always easy to have your turbines and modules and inverters and batteries, et cetera. I think that we are doing a good job. There are some good news like Bjerkreim. There might be as well, unfortunately, in the future, we'll see how it goes. Some projects that may have to start later than expected. Do not expect Bjerkreim to be the new norm. At the same time, I mean, do keep on believing that Neoen is doing its best, and that we are not so bad at what we do. For sure, we are at least trying to really do as much as we can, and we are not the limiting factor, let's say, to the start of construction of new assets. Thank you very much. Thank you, speakers. Our next question comes from the line of Nash Quay. Your line is open. Hey. Good evening, everyone. Congratulations for the good results. 3 questions from me. I was cut off on the call earlier, so I apologize if some of the questions were asked before. The first one is on storage. The storage business in Australia is doing really well, and I wonder if you can replicate that in Europe. The second question is on the Victorian Big, the impairment over there. I know there are some security issues. Can you tell me exactly what happened? Are the assets damaged? What are your options over there? The third question, let me check. On page 15 and 16 on the adjusted EBITDA. I wonder, is there any impact on cash flow? For the adjusted EBITDA, looks like there The impact is negative, but how does that reflect in your chart on page 16? Thanks. I will let Louis-Mathieu answer the sub question. On storage, yes, we are doing a good job in Australia. The good money that we make in Australia is well deserved because we provide very valuable and, in a way, cheap services to the grid compared to what they had to pay in the past to get the same services from diesel generators. It's really mutually beneficial when we make good money because we provide great service. That we have the ambition to replicate what we do in Australia in other geographies. There are many things that we do with storage. I mean, we can provide backup to the grid. We can stabilize the frequency of the grid. We can provide inertia. That's something that we launched very recently. We announced that this week. The knowledge, the expertise, the learning curve that we have built in Australia is not fully replicable because every country has, and region has their specificities. There is much that we have learned in Australia that we can reuse in Finland, in France, in El Salvador, where we already have batteries. We have in mind, of course, the idea of rolling out our batteries to pretty much every country where Neoen is going to be an important player. It's really going to be part of our mix, not only in general, but also at every region's level. In Mozambique, it's roughly a 50 MW wind farm that has not been destroyed. To our knowledge, it's not even been touched by anyone. The Mozambican army is on the site to protect the asset and the neighboring high voltage line. There are some terrorists coming from the northern, very northern part of Mozambique, i.e., from the Tanzanian border. They have attacked some sites that used to be a bit more north or northeast of where we are. You may remember that TotalEnergies, so I mean, some pretty big guys, evacuated their own site a couple of years ago. Those terrorists have come even further south, in the vicinity of our own solar farm, less than 15 km away, which we thought was a high enough level of alert so that we should evacuate the site and not have our people, of course, be attacked, injured or even killed by terrorists. We have not been back on site yet. We do not plan to go back on site anytime soon before the situation is fully stabilized. I can confirm that the asset has not been touched at all, and so far has retained its industrial value. On your third question, there is absolutely no cash impact from the change in fair value of derivatives. It's purely accounting, so no cash impact. I'm not sure I fully understood your question on slide 16. Can you just rephrase it, please? Yeah. Looking at slide 15, that's a negative impact, negative adjustment from reported EBITDA to adjusted EBITDA. I'm looking at slide 16. You are trying to get H1 2021 reported EBITDA- H1 2022 adjusted EBITDA. I just wonder where this adjustment sits. Those are directly adjusted numbers. Yeah. What you have here are the number plus adjustments. Okay. That's the reason why. If you want to have the details, you have an appendix slide in the presentation, which sits 32. Slide 32. There you have all the explanations. Gotcha. Perfect. Thanks a lot. You're welcome. Thank you, everyone. I would like to apologize beforehand if I'm pronouncing your name incorrectly. Our next question is coming from the line of Thibault Dujardin. Your line is open. Hello. Good afternoon. Thank you very much. Can you hear me? Yes, we do. Yeah, yeah. My first question would be concerning the details of the farm-down. Sorry, I was not able to catch the details on this one. Second question would be on the supply chain situation, how you see it evolving on prices and on constraint in terms of procurement. Lastly, on the PPA price environment, how is it evolving considering the evolution of interest rates and CapEx and so on? Thank you very much. If Thibault maybe Louis-Mathieu can give you the details on the farm down, and I will make an additional comment on farm down, and I will take the 2 following ones. On the farm down, it's a wind farm which is located in France. We are selling or we agreed to sell 95% of the plant with Sorgenia, which was the company who helped us develop the project. The EV is slightly north of € 65 million. The farm down contribution should be around € 15 million. It's a project of roughly 20 MW. We are doing with that transaction what we have done last year with the 2 other wind farm-downs that we executed, which is something I believe that makes a lot of sense, at least on our end, which is to have a call option. At the end of 30 years, we will have the rights to become again the owner of that site and asset and to have the repowering value for us. It's important that we have this long-term view. We have sold 95% of those assets. We are still a shareholder, and we are still locally an active player. But again, we retain for ourselves the value of the repowering that goes with the development that we have conducted for those projects. On supply chain, yes, it remains complex, for solar, for wind, for storage. It's true. It's nothing new, at least not on our end. We, you may remember that in March 2020, at the very beginning of COVID, we were among the first ones and the loudest ones to say that the supply chain would be disrupted in the long run. That's still very true. Let's say that it's a daily struggle, for sure. At the same time, I do think that we are doing a reasonably good job and probably better than others. Actually, the way supply chain problems, difficulties are handled by a given player like Neoen might actually even become a differentiating factor. I'm not saying that it's positive, but if others are struggling even more than we are, it's relatively in our favor. It's again a daily struggle. Some bandwidth of the company is dedicated to handling supply chain matters. I do think, and that shows in our numbers, that we are not using supply chain excuses or problems to explain why we would have poor financials. I mean, in a way, you see in the numbers that we have given tonight, that we are not, let's say, slowed down, handicapped by supply chain matters. It's again painful, but that's something that we manage. On PPAs, well, yes, we have costs on the rise, not only industry, our ones, but financing costs as well. That's something that we believe we'll be able to pass on to our clients. I'm sure that they would have preferred to have whatever PPAs at € 60 versus €75 or anything like that. In the end, it's still much more competitive than anything else that they can have access to. Even if the PPA offers that we are making at the moment in France, in Finland, in Australia, whatever, is higher than what we could have submitted a few quarters ago, and certainly higher than what our off-takers would be willing to see. It's still a very good deal for them, and I'm sure that for us, it's going to be the case in pretty much all of our regions. The extra costs that we are seeing will be neutralized by the extra revenues that we will get from our clients. Thank you very much. Just maybe a follow-up question concerning the situation and the exposure of Yeah. I hope I got it. It was in Portugal. At this stage, it has not evolved. We'll communicate on that this year for sure. As we said, I think a few weeks ago, Portugal was one in 2019 with a price that was, I think, quite aggressive but quite reasonable as well on our side. The business model was made tougher by the increase in CapEx and OpEx and financing costs. We do hope that the Portuguese government will help all participants, and not just Neoen, by doing what is currently being done in France, so giving some early generation revenue. They have already offered to let us have extra capacity. There are some initiatives and a lot of good common sense from the Portuguese government on how to help this project progress because it's in everyone's interest. We do hope to have a satisfying enough solution for those projects. Do not expect to have double-digit Thank you very much. Thank you, speaker. Our next question comes from Martin Tessier. Your line is open. Yes, good evening. Thank you very much for the presentation and congrats on the good results. My first question comes back to the wildfires in Gironde. Good news that the Cestas project has not been affected. What about the big project called Horizeo that you are currently developing with ENGIE? Is it affected? Second question on the farm-down transaction. I did not really understand whether the asset was still under development or already operating. If it's already operating, could you provide us with the annual EBITDA of the asset? Third question on interest rates. Have you seen in your recent new borrowings higher equity portion required by the banks? Many thanks. Thank you for your questions, Martin. The fires, no, not so Cestas was untouched and there wasn't any problem with any of our solar farms or batteries in the southwest. Horizeo, the project that you mentioned, which is not under construction obviously because we do not have our permits yet, was 550 km away from the nearest fire. So quite far from everything that was destroyed. On farm down, Louis-Mathieu is trying to get that number. On interest rates, yes, I mean, we do see some impact already, but, I mean, first, the existing, let's say, volume of debt that we have is not a problem because we have hedged our interest rates. For new projects, yes, it's more expensive, but the gearing, we communicated in March 2021 that for the next 5 GW, so from 5 GW in 2021 to 10 GW in 2025, we were targeting 40% equity, 60% debt. Which by the way, at that time, was deemed to be very surprising by some analysts who were expecting like 70% debt or 75% debt. So we were anticipating a higher proportion of equity, and it's happening, and that's okay. Of course, there are big differences from one project to the other, but 40% equity is something that Neoen was preparing for, and that's what we see at the moment. But again, there are some 20-80, some 50-50, there are quite many different situations. Again, Neoen was preparing already 18 months ago for a much more equitized world. The answer to your question from them, the annual EBITDA of this plant on a normalized basis, taking into account its PPA, is a couple of million EUR, so slightly less than €5 million a year. Okay. Very clear. Thank you. Thank you. Our next question comes from Philippe Ourpatian from Oddo. Your line is open. Second round Philippe. Give me one more time. Yeah. You're here? Just one question about your hedging policy and mainly about the PPA side. One of your competitor this morning was mentioning that short-term PPA, which are more linked to spot prices, are really more interesting than long-term PPA. I know that you want to contract at least 80% of your generation, but are you thinking maybe to a little bit move this 80%, including in this 80% some more short-term PPA? What I mean, the definition of short-term is that contract less than 10 year, where effectively more sensitive to market prices rather than the trend for contract above 10 years duration. Are you thinking about this kind of a little bit modulation about your contractual volumes? Let's be very clear, Philippe, to be in a position to sign shorter-term PPA, you need to have the available capacity, because the issue with short-term PPA is the following. You cannot leverage from a financing perspective a short-term PPA. It's impossible. No bank would be willing to do it. What you have to do if you want to raise some debt is to enter into longer-term PPA. For that, to enter into short-term PPA, you have to have assets which already have a merchant exposure. You would swap some merchant exposure with a short-term hedge, or you need to have assets which are exiting their tariff and replace this plant, which would be otherwise on the market by short-term PPA. Otherwise there is no possibility. You could, of course, build some assets, fully merchant, but the consequence of that would be that you would need much more equity. It's simple math. Xavier, if you want to elaborate. I mean, we do not want, let's say, to be naive. Those who pretend that it makes more sense to assign short-term PPAs, they are just, let's say, in a way, arbitraging between P&L and balance sheet. It looks good, but at the same time it's not bankable, so it means that you do not have access to interesting financing for the long run. At the same time, we are not against short-term PPAs or short-term hedges, in a way, let's call them that way. What we have always envisaged at Neoen is to have large assets. I don't know, let's look at the example of a large wind farm, like, Mutkalampi in Finland. That will have within that same asset some long-term PPAs, some medium-term PPAs, some pure spot. I think that by having some diversification effect, we will be able still to get good financing and at the same time have some interesting upsides coming from shorter term PPAs. If you have the choice between, for I don't know, a 20 MW solar farm between a 3-year PPA and a 12-year PPA, there's no good intrinsically better choice than the other. I mean, what you get on one side, you lose it on the other side. It's not a smart choice, it's just a choice. I mean, it can be very relevant for that competitor that you are alluding to. At Neoen, we also value bankability and the quality of our balance sheets and the opportunity to raise some debt at very interesting terms. It's also something that, in our view, is valuable. We will try over time to get the best of both worlds by mixing, in a given asset, long-term PPAs and some, let's say, some interesting prices coming from shorter term PPAs. That's also to our taste. I mean, we do not have, obviously, anything against that. It's also something that we appreciate. I guess that was it. Well, it's time for us to say thank you for this very nice Q&A, and I hope that you enjoyed our numbers. We will of course remain fully available. Louis-Mathieu, Delphine. We will. I will be available tomorrow after that. We will have a well-deserved vacation and we'll be there next week in case you need to have a follow-up conversation. Yes, we are happy to share with you those numbers. There's a lot of value in what we do. It's not easy on a daily basis, but we do believe that hard work does create value, and that's what we wanted to share with you tonight. Thanks, everyone. We'll be in touch and do not hesitate if you have any questions that we have left aside for tonight. That concludes. Have a good vacation. Yeah. Thank you, speakers. That concludes today's conference. Thank you for participating. You may now disconnect.