Magnora ASA

OSE:MGN

Earnings Call Transcript

[Erik Sneve, executive]

Thank you. Good morning, and welcome to the second quarter 2022 from Magnora side. First of all, I would like to thank our owners, Board and our incredible team, and the portfolio companies, and the banks we cooperate with, the partners in our various portfolio companies as well as our customers. Q2 was an incredible quarter where we sold 366 megawatt from year-to-date with OX2 last year with the Helios company. We also signed the lease agreement with the Crown Estate in Scotland, and we've achieved milestones we could not believe a year back. It's been 2.5 years, and we now have a portfolio of 3.0 gigawatt net portfolio to Magnora, and this would not have been possible without the incredible team we have in Magnora.

So my name is Erik, and I'm the CEO in Magnora. I will be presenting along today. And as most of you know, we're a pure-play renewables developer with a focus on early-stage investments. We're growing an asset-light portfolio of renewable energy projects, including on- and offshore wind, solar, energy storage and solar technology. This development is backed by our strong team, dedicated and highly capable people, people from Statkraft, Aker, Lundin, DNV and many other blue chip companies.

We have a target of reaching a total of 5 gigawatt net share capacity across our projects by 2025. And the development in support of our near-term cash flow from our legacy FPSO business, which we're looking forward to, and also dividends from our portfolio companies. We received the first dividend early in August from Helios. We have a long track record in energy project development with our team.

We sold off all our assets and intellectual property rights in oil and gas and restarted as a renewable development company in late 2019 with a strategic update in March 2020, the future is electric. We grow along 20 years of extensive knowledge from project development and management, which we're now capitalizing on as we continue to be a driving force in renewable energy project development. Our portfolio consists of eight companies and a few early-stage corporations. In short, we're investing in renewable energy solutions that can deliver clean energy to industries and consumers.

We continuously monitor new projects with an ambition to invest early stage cooperate with strong partners, derisked, matured projects, all the way through farm downs and sale. At the ready-to-build phase, we seek to optimize the ownership of the assets to suitable owners for long-term ownership and operations. As an example of this process, one of our portfolio companies over the past 9 months sold off 366 megawatt of solar projects in Sweden alone. That's less than 15 months after our initial investment in Helios and we have started to distribute dividends from the company.

As you understand, we like to get involved with the right projects early, already in the feasibility and conceptual stage. Risks are higher, but the return potential is also very high. It's important to have the right people on board with experience from these type of projects and project development and the ability to get things done right. Indeed, development phase, we manage operational costs and milestones and have the potential to harvest a significant risk premium at ready to build. Diversification is core to our strategy to secure systematic returns.

We currently have 8 projects under umbrella. As mentioned, Helios have truly proof of concept by the sale of 366 megawatt in Sweden alone in the last 9 months and have started to pay dividends. I'll get back to the details. Our solar PV enhancing perovskite technology company, Evolar, is progressing as planned and is closing in on key technological milestones soon to be disclosed. Our South African portfolio have got an offer for 650-megawatt grid connection, and we observed increased interest and progress in the region with the recent deregulation. Magnora Offshore Wind is progressing with -- studies and development of local supply chain in Scotland. And we reached final agreement with a local partner Hiraeth Energy for the development of opportunities in the Celtic Sea.

Kustvind has no red flags in the environmental impact studies so far and continues to be a highly attractive project given the development in electricity prices in Southern Sweden. Magnora PV, U.K. and Magnora Storage U.K., our recent ventures, we received a potential for development of 60-megawatt solar capacity and a 40-megawatt hour battery energy storage project as a first step. We're looking at new projects. We found a strong local partner with a track record of solar and storage development, and see favorable conditions for developing these projects in the U.K. Adding to this, we are in the early stages in our cooperation with Troms Kraft for the development of a green maritime fuel hub in Tromso area under project name Neptune. Every project is different.

If we look at the different technologies and business models in broad terms, it looks something like this. I hope you can read the graphs. To develop a solar project ready to build, we expect a timeframe of 1 to 2 years. The return potential on development expenditure is expected to be multiple times as you can you see on the graph, if you compare Devex with the margin. And energy storage project is even more profitable in terms of return, but it has a lower absolute return.

For onshore wind projects, we expect 2 to 8 years with a 10x return based on historical transactions. In the Nordic area, we see close to 8 years. So we have avoided this area for the last 1.5 years. But in South Africa, you have development access for more than 2, 3 years for onshore wind project. And for the offshore wind projects is a little different because we have these options where you can monetize much earlier, but the development phase of those projects are much longer.

There are significant differences in terms of technologies, regions, maturities and so on. Success does not come without risk, and we acknowledge that not all of our projects will be matured to the point of construction. Successful delivery of the business model includes management of EPC contracts, not taking the balance sheet risk, management and the negotiations and aftermarket services providing recurring revenues. It's a complex integrated business, and we have the right team.

Next slide, please. If you look at the forward curves in the U.K. and Nordpool area in SC4 in Southern Sweden, we observed increasing electricity prices. Consequently, the project economics are more favorable and we have several projects exposed to these pricing regimes.

I will now take you through some of the project details and start up with Helios. We made our first investment in the greenfield developer of the large solar PV projects back in February 2021 after 3, 4 months of due diligence. We've increased our stake to 40% in September last year based on the great prospects of the company. And I think we were right. Now approximately a year later, Helios have sold 366 megawatt of projects and have more than 37 ongoing development projects, where 80% have faster grid indications.

The macro is in favor, and we see electricity projections moving upwards, increasing the attractiveness of the projects. Current forward contract prices, as you saw on the previous page are significantly what we can observe from the graph in this slide. This graph is based on prognosis from Thema consulting. And these levels, you see here on the yellow graph is 3x higher than the historic price in the Nordic region the last 20 years.

With continued strong demand from Tier 1 counterparties and a growing land bank, we're confident that Helios has a significant dividend potential in the hundreds of millions SEK range over the next few years. Final full payments are subject to projects being the ready-to-build phase. However, we increasingly get larger and larger upfront payments, and we get bid for larger projects. Most sales are bundles of projects.

If we take a closer look, OX2, Commerz Real, Solgrid and Nordic Solar are all top-tier counterparties in the transactions. If we talk about the latest transactions in June, we're extremely pleased with this landmark agreement. In terms of the numbers involved, it's significantly higher than the previous transactions. It also underlines the commercial potential of Helios development portfolio.

In the past 7 months, Helios has concluded four transactions that now 10 large-scale TV solar plants at a combined capacity of almost 0.5 gigawatt. We see demand for larger and larger bundles of projects with souring price level for green electricity. It's expected that the market will drive even more transactions in the time to come.

Solar power is the fastest-growing and cheapest renewable energy source. Evolar is making a conventional technology, at least 25% more efficient. As you can see on the graph, the theoretical ceiling is above 40%. Perovskite in tandem with polysilicon-based cells can create high-efficiency cells as traditional cells have stalled and reached its theoretic ceiling of around low 20% of cell efficiency.

Evolar's business model is to commercialize turnkey solution for integration into existing solar panel production lines. Recently, there have been highly interesting commercial discussions with new clients. And the company is planning to release technical progress reports soon. We have a strong confidence in the technology, team and commercial prospects of Evolar.

We're continuously exploring options for taking the company public. Biden's new package further increases the attractiveness of Evolar's business case and we see the same in Europe and India, as many of these countries want to establish their own industry outside China.

Next slide, please. Magnora Offshore Wind has matured an offshore wind portfolio in record time. Just about a year ago, the company was founded in -- as a collaboration with TechnipFMC, and Magnora now holds 80% of the shares in the company.

The teams have three things on the agenda. First, it's N3 project in Scotland. Second is the Celtic Sea opportunity with Hiraeth Energy where we signed heads of agreement in the quarter. And three, preparing for the upcoming regional leasing round. Our company has a global ambition and is preparing for strategic and industrial corporation in several geographic areas.

Next slide, please. In the second quarter, Magnora Offshore Wind secured the right to the N3 area by the payment of the auction, which represents EUR 24,000 per megawatt. On the bottom end of this graph, you see what the other consortiums paid for round 4 in the same grid, less than 12 months before. So this -- the prices on these licenses in auctions are way higher than in the beauty contest like ScotWind, where we came up with our concept and idea on how you can establish a local supply chain for the ScotWind project.

We believe there is a large upside to the value in the ScotWind compared with license fee. There are, of course, large differences in the projects as this is a floating project, but floating is where the future is. And we see a large upside to demand for green energy and floating wind will be very competitive in the years to come. For more color, it's been noticed that private segment transactions are done at significantly higher prices than what the small and medium-sized companies are priced in the stock market.

Next slide, please. A lot has happened in South Africa this year, and we're very happy to have integrated the team of six local renewable specialists through our acquisition of 92% of African Green Ventures, adding to our own Magnora South Africa, a holding company for our SPVs.

Short term, we are very proud of our current development portfolio in South Africa of approximately 1.7 gigawatt. And long term, we see a large and growing renewables opportunity in the region with strong banking by the local government. In June, received offers for 600-megawatt grid connections at various locations. Our 1.7 gigawatt portfolio, we're expecting 100 to 250 megawatt to be in the ready-to-build phase already this year. So we're going to initiate sales discussions in this quarter.

Beyond that, we have the majority of our portfolio in early stage or development phase, and we have 60,000 hectares which is a lot of area. Helios, in comparison, has 2,500 hectares approximately.

We are actively screening for additional projects in new areas and our committed team on the ground, we believe we have an advantage on chasing attractive opportunities. We absorbed interesting transactions in the South African region as well and strong interest from new entrants in markets, both for single projects and platforms after recent deregulation.

Next slide, please. Kustvind is our shallow water bottom fixed project with a total capacity of 500 megawatt, which is the same size as the capacity awarded by Magnora Offshore Wind and the ScotWind leasing round. The project has the potential for 2 terawatt hours of production, equivalent of powering 150,000 homes in the strong pricing area in Nordpool SC4.

Lately, there has been a growing positive interest for hydrogen development in the area, which adds relevance to the projects. And recent -- the impact assessments have identified no red environmental flags.

There is no secret that these kind of projects take time, but we see great prospects for the Kustvind project and expect to submit their final application by year-end.

Our most recent venture into two projects in the U.K. is not by chance. 2021 marked the first year of sustained subsidy-free growth in solar PV. The good help from rocketing electricity and gas prices. 730 megawatt capacity was added in 2021 in U.K. compared with 538 megawatt in 2020. In this market, we're venturing with a strong local partner to develop 50 -- 40-megawatt hour energy storage capacity and 60 megawatt solar PV.

In the U.K., development margins have been in the top range of what we've seen in the Nordic market. And recent transactions in the area have been concluded even higher than that. We hope that the U.K. venture can become, at least the miniature Helios, and we expect the first project to be sellable in first half of 2023.

To sum it up, Helios is progressing fast and has a target to reach 2.5 gigawatt development portfolio by year-end, included the conducted transactions in 2022. Evolar is progressing towards commercial expansion with potential for subsequent IPO. In South Africa, projects are moving to the ready-to-build phase. Magnora Offshore Wind is developing Scotland, Celtic Sea and other opportunities with TechnipFMC. Kustvind is progressing, and we expect to submit the final application within the year. In addition to this, we are progressing with PV and storage projects in the U.K.

We're experiencing increasing interest in direct investment in our portfolio companies. And as of general, trend we see interest investment in transactions, not only on SPV level, but also on a platform level. We also noticed that prior transactions in the renewable space are done at much higher prices than what we see for listed companies.

Let's move over to the financials. In the fourth quarter, we had revenues of NOK 4.3 million, mainly from the route income from Dana offloading, has been moving up in the quarter, and we believe there is a chance that it's moving up even further in Q3. The increase in the quarter is due to slightly higher offloading volumes. We also provide professional services to our portfolio companies, which in the first quarter gained NOK 1.6 million.

Our adjusted EBITDA came in at negative NOK 1.1 million, up from negative NOK 3.2 million in Q1. The deviation of our reporting of EBITDA, NOK 22.7 million was the development of M&A expenses and development costs. As Evolar is -- we own more than 50%, we consolidate the numbers 100%, and that's the big difference in the development costs, but South Africa and ScotWind also adds to the deviation.

Our operating profit was negative NOK 15.1 million, positively impacted by a NOK 7.6 million profit from associated companies, mainly reflecting the strong progress in Helios. This is not reflecting the full effect of recent sales in the quarter. Pretax profit came in at negative NOK 13.5 million.

During the second half of the year, we expect to receive approximately USD 8 million from the Shell Penguins FPSO, NOK 78 million at current exchange rates. This will represent the first of three installments and will be followed by USD 4 million payment at first oil, another $4 million after production of 4 million barrels, which will take approximately 90 days at the current production rate at the current installation. In total, we expect a total of USD 16 million paid over the next 6 to 9 months. We see no risk in the delay and take greater comfort in the fact that Shell highlighted the project in their most recent Q2 2022 report.

We continue to receive $0.50 of every barrel produced and offload from the Western Isles FPSO. And the life expectancy of that vessel is 30 to 40 years from today. In addition, we see dividends coming in from asset farm downs in our portfolio companies going forward. This puts us in a unique position.

Next slide, please. And we have high ambitions for future growth. Our net share of the development portfolio is currently at 3 gigawatt over halfway to our 5 gigawatt ambition in 2025. We have a large and growing opportunities in the global offshoring market, where we already have marked ourselves with Magnora Offshore Wind and Kustvind. Solar PV is the fastest-growing renewable source and [indiscernible] the Nordics and Europe through Helios. And in South Africa, through African Green Ventures in Magnora South Africa.

In the growing solar PV market, we're confident that the perovskite technology and Evolar will play a significant role. And we have strong beliefs in the team that they will commercialize the technology. None of this can happen without great people, local present and can-do attitude. That's why we believe that we're in a great place to capture opportunities that lie ahead of us.

To support these claims, we have set out a handful of financial targets for the first time in addition to the net share ambition in 2025. Namely, we target to sell a net share of 150 to 250 megawatt to our portfolio companies by the end of 2022. We target the price range for sale of onshore wind and solar PV projects in the range from -- net range from 0.5 million to 1.5 million per megawatt. In the U.K., it might be a little higher. We set out a call for a dividend -- we set out a call for dividend for our portfolio companies with excess cash to invest in compelling new opportunities. We have showcased this already with Helios, and the dividend in this quarter was limited to the free equity at the year-end December 31, 2021, that's rules in Swedish company law and similar in Norway.

Thank you for listening in. And with that, I open up for Q&A.

[Erik Sneve, executive]

So first project is from Magnus Solheim. Have you paid the entire ScotWind option fee? Or is there any remaining payment?

No, we've paid the full option fee and as opposed to the fees in round 4, there was an annual fee all the way to production start. And you saw that on the chart in the presentation. So it's only this payment that we have to make. And it's been paid by 80% by Magnora and 20% by TechnipFMC.

Next question is from [indiscernible] How do you consider the investment climate for renewables projects today? How do the energy crisis influenced your investment plan?

No, we consider the investment climate to be really, really good. We have moved into markets where we know the regulation well or there is deregulation. So we have all the backing from government and important stakeholders. We have tried to avoid areas where there is huge resistance towards onshore wind. We think there might be a change if municipalities compensate -- or compensated by national governments. We think the current energy crisis influence investment plans of most companies. But we saw the change in the investment climate already from last summer when prices started to increasing. And I think this was based a lot on huge interest for solar PV and selling our first project in the structural process, which started last year, we had interest from 35 companies, and that was prior to the Russia situation.

We see that a lot of funds get larger and larger and a lot of pension funds have increasingly higher allocation to renewable energy. And we also see that even companies in South Africa are considering to lower their CO2 footprint because we're afraid their products can't be exported to Europe. So investment climate is very, very good. It's always a challenge with the grid, and that's why there is opportunity for us. We try to search where there is possibilities.

A question from Stefan. Is the theoretical possibility that Magnora can sell the rights for N3?

Anything is possible, but we have a strong focus on derisking and maturing that project and potentially farming down to a reputable industrial partner, and we see huge value potential in maturing this asset for some time. However, we have interest from industrial parties that are interested in joining the ScotWind project.

The next question is also from Stefan. Helios, when will the dividend money from sales of project be visible as the positive income from Magnora? And will shareholders receive any dividends from these sales in the future?

At the price spend we showcased, you see that there is a huge dividend potential in Helios. They need to hold cash in the company to staff around 15, 20 people. And you can make the calculation yourself, how much cash they would need them. We also have some extra cash for growth opportunities and great connections. We have showcased lower end of the quarter in the numbers that we have been able to pay dividend from Helios. Most of -- in Helios comes from Magnora. So we're very proud to have the first dividend.

We have done four major sales with 10 projects and the income from the various sales come from the sale of each project. So depending a little bit on the -- on when all the milestones are reached regarding the definition of ready-to-build in the contracts. So we see a huge dividend potential end of the year and 2023 from Helios. And they've just sold 1/5 of their development portfolio so far.

Another question from Stefan. Earlier, you mentioned that the listing on stock exchange in Stockholm is something that will happen regarding Evolar and that Magnora shareholders will benefit from that. Shareholders are waiting for this to happen. Can you give an update on that?

We are constantly monitoring the situation, as you know, first half of 2022 was not very good for most stocks and not for technology stocks in particular. But we have strong interest from bankers. We want to support a potential listing. And we are also comparing this with commercial milestones and technical milestones. And we are constantly monitoring what's best for Magnora shareholders and also for Evolar as a company. Stockholm might be the right place since it's a Swedish company, but we have not concluded on that yet.

Magnus Solheim. Can you comment on the expected Devex M&A and CapEx for the remainder of 2022?

We will come up with an update on that in the next quarter. It's nothing big unexpected. We -- in the new deals like in the U.K., we have a pay-as-you-go model based on the actual projects. In the early phase, most of our investments were done with larger upfront share issues, but we have now in most of our deals, structured payments as pay-as-you-go with quarterly or monthly calls for cash, which gives us good flexibility. And we have -- don't expect to win any new big license agreements like in ScotWind or have any other major investment programs as so this.

We will be interested in expanding the portfolio in the U.K. And development costs there are slightly higher than in Sweden because you need an EIA, not a complete one like in Norway on hearing process, but you need something to call or refer to as an EIA.

Magnus Solheim next question. Can you comment on the 150 to 250 megawatt target for 2022? Are you assuming sales from the South Africa portfolio in this target?

We have been looking at all our projects and project companies. But I think it's unlikely that it will be South Africa Helios or U.K. Of course, we have interest in and discussions in the other companies as well, but I would not like to comment on that right now.

[indiscernible] markets. Can you elaborate on the payment terms for the projects Helios has sold so far? How much upfront? And when can we expect the remaining part?

The upfront payments are huge. This is not option payments really. We get the significant share. And I don't want to say the exact share on an open webcast because customers and competitors might be listening. But there is a transfer of shares with the upfront payment. So that gives you some aspect. And then they would have to pay when projects are ready-to-build phase. And that would mean that the grid connection is ready from the transmission provider. It does not necessarily include many of the other deliverables, but that's the most important definition of payment terms in the deals we've done so far.

The first deal we did was a little different. That was more of business development agreement. And we think as a sour, we get increasingly more and more attractive terms. And as I mentioned before, 35 companies were interested in the 69 megawatt projects we sold this spring. And I don't see interest being less going forward. So I think transfer of money can happen even customers taking larger risk. And you've seen the deals with Siemens Gamesa, for instance, where the buyer buys 4 gigawatt of projects and it's just 400 that was in the ready-to-build phase. So this is something new where we see customers willing to take some time risk and also actual development risk on the grid connection eventually, there will be a grid connection for all renewable energy ecosystem providers and municipalities are very friendly, at least for solar PV.

We expect to potentially get a lot of money this fall, but also next year. And since the projects are larger, it will be significant payments. You can use the graph in the presentation to calculate and see what midpoint you prefer, but it's very competitive.

Question from Paul [indiscernible] What's your main view on financing the growth? You have exciting assets and maybe possibly to take in strategic investor to finance growth. If not, how do you see this going forward?

It's a good question. We'll have some discussions even last year to start JVs with industrial investors and the infrastructure funds, it didn't materialize. And I think based on discussions we've had the last 3 months, I think it's possible that something can happen regarding financing of site business. We have a very good relationship with two banks. And as you noticed, we increased our funding at very attractive interest rates from the bank to finance some of the growth since Penguins have been delayed.

We have not really been on any international roadshow before we went to Stockholm in early Q2, late Q1 and experienced some interest from institutional investors there. We will be spending more time in this quarter, meeting investors in London and potentially Germany. We have good discussions with the big international banks in London as well that wants to set up meetings with us. We're too small for them to be clients of them, but they would like to present good companies to their strategic and ESG investor base. So I think with the achievements we have had during the first half, you've noticed that we can meet CEOs and deputy CEOs in many of the large Nordic utilities. We also experienced good growth, good interest from infra funds and pension funds and get a lot of ideas on our table. So I think it will be very exciting time for us, end of '22 and '23.

Thomas [indiscernible] question, can you elaborate a bit on the interest for Magnora ASA?

No, I cannot get too much into the detailed interest, but explaining about some of the industrial transactions that has happened. We received incoming calls from larger international banks that want to present us. We also have strong industrial interest for some of our verticals and we're thinking about a little bit how can that be structured in a way that benefits Magnora shareholders and some of these people have limitations to what they can actually invest in. We are diverse in many areas, both technology-wise and geographically.

But as I mentioned to the previous question from [ Vaman ] is that we see strong interest from our verticals. And so we think it's going to be exciting times.

Question from [ Peter Vanderbilt ]. Could you please talk about how prices per megawatt differ between jurisdictions?

That's a good question. I think, first of all, the difference in pricing is actually the unit economics in each specific project. That's like 7-11 kiosk or for an oil field, you actually need to look at the unit economics. These margins would not have been possible without good unit economics. But when you're close to a grid connection, you have good radiation or you have good wind production, you have good CapEx, you have a service industry in that area then you start to talk about good unit economics.

I think some of them in Norway, for instance, some onshore when you've seen margins from NOK 700,000 per megawatt to NOK 3 million per megawatt, all depending on the competitiveness of the project. You've seen that in small hydropower as well. In solar PV, it's new and mostly margins, previously, have been with feed-in tariffs in Southern Europe. Now we see that we're able to sell projects at similar prices as most wind projects actually, historically, in the Nordics.

In U.K., prices have been hovering around NOK 1.5 million for solar PV, historically. But we've heard quotes now above NOK 2 million. I think you see -- you've seen our competitors report recently in the Q2. And there, we saw significantly higher margins per project. Some of this is offset by higher equipment prices. But I think the higher price you see is quite significant. And you've seen two Swedish-listed companies.

South Africa historically has been probably weaker, but you saw a huge transaction there as well. And that transaction looked quite similarly priced as historical deals in the Nordic region. So I think prices in South Africa has increased a lot too. And the market, South Africa until last year, was basically on the free auctions where prices are very competitive in the auction rounds. But now you open up the corporate PPAs and I think prices are -- have increased in South Africa. But based on our portfolio, they're the lowest there, but there it's the easiest place to get the largest megawatt. So it's offset by volumes.

Question from Jørgen Lande. The adjusted EBITDA, NOK 1.1 million is for the Magnora business and Evolar is fully consolidated in the numbers with a negative NOK 22.7 million. We can go over that after meeting with the CFO, yet again, to have the further details of the project.

So how does the economics of ScotWind work on [indiscernible] capital?

Well, there's a CFD auction potentially down the road where you apply for the CFD. The recent CFD for floating in the U.K. this summer, I think the prices were around [indiscernible] per megawatt hour. And then you need to have an LCOE below that for the economics to work really. That's how it works. So based on most industry analysts and our own projections, it's -- we believe that the LCOE per kilowatt hour would be significantly lower than EUR 100 per megawatt hour when these projects will be built out later in this decade.

Magnus Solheim, another question. Have you paid the entire auction fee? I think I answered that question earlier.

Next question, Turner Holm. In terms of liquidity, there was NOK 10 million of free cash at the end of Q2. Can you provide some perspective on the liquidity movements in the second half, both on the investment side, the inflows from Helios dividends or earlier sources?

The number you saw there Turner, is the amount of one that was in the bank accounts of Magnora, not on the overdraft facility. So you have to look at the -- we have a financing with the leading Nordic bank in July. So the cash and credit line available as of August 4, I think, it is NOK 85 million. And this will be increased -- improved with the payment from Penguins. And maybe there will be a special dividend, interim dividend, with Helios during second half as well. So we need to discuss that with the auditor in Sweden, also tying it with new payments from the clients. So the number to look at is NOK 85.4 million, Turner.

Question, [indiscernible] In this time of energy crisis, is Evolar unique Power Booster Technology expected to be commercialized soon?

As I mentioned, we have 3 joint development agreements and they're working very diligently on the technological milestones soon to be announced. And I don't know exactly when these clients will decide to build a pilot factory, but we have new incoming clients in the quarter as well after -- in Munich in May, and it seems like the dry process Evolar is running as opposed to the wet process, most other initiatives have been running, might have a better growth outlook as we interpret it now.

You have to remember that the Evolar team has developed and manufactured thin-film solar cells for 20 years with the same machines, but with a different material. So I think some of these large solar manufacturers have been a little disturbed by the huge demand from their existing business. But if you look over first half as a whole, you see that even a company like Fortescue have moved into perovskite first of all. Most major Chinese manufacturer subs, put up research projects regarding perovskite. And it's basically the only solution the industry is looking to.

And Evolar is basically also the only company with the business model of selling the technology, process, consumables and software to these companies. The other companies, most of them have R&D efforts, how they want to implement it to their product. And then you have a few companies that have a technology approach, but we are in discussion with a few of them.

The questions pop up in out orders. So you have to excuse me for taking some time to read these questions.

Another question from Turner. You mentioned in the outlook section, the Q2 report, that company is experiencing industrial interest for various platform companies, but also for the parent company, Magnora.

I think I answered some of that in the previous question. We see a lot of companies focus on offshore wind and solar and also South Africa that would like to participate and have -- we have incoming calls from three global players just in June, July regarding South Africa. So we absolutely have to run some structural processes because it's too time-consuming and challenging for me and the CFO to handle this by ourselves.

And solar PV, I think most, for instance, Nordic utilities have stated in the first half of this year that they will enter the solar PV space. We've been in discussions with a few.

Then I have to run down the question list again.

[ Philip Stenson ]. How well, USA's Inflation Reduction Act Package influence Magnora going forward?

First of all, I think much more money will be funneled through solar and wind, which will benefit us anyway. But I think they have a tax credit and support schemes for technology. The NREL and U.S. governments already, in 2020, handed out some only for perovskite. And we have been in discussions with potential partners there earlier. And I think some of these discussions will be renewed with packages like this. I actually haven't had time to read through the Inflation Reduction Act in detail myself. I've asked Evolar actually this morning. And I think you see the same in the EU, where they're in discussion to potential clients.

We have received significant, EU funding, the project in India, is backed by government funding in both countries. So this is for real. And most countries don't want to be dependent on China regarding solar cells due to trade balance energy security and many other issues. It's -- we're very pleased to learn about the Inflation Reduction Act package.

Question from [ Petri Collett ]. How's the process you are looking for a CFO [indiscernible] forward.

I think that's going well and fine. We have met a few potential candidates. And if you know about good candidates, please let them send their CV to the company.

Last question from Magnus here. Has there been any updates on the EUR 15 million, the EU Horizon grant for Evolar?

The chances look low now as a few other [indiscernible] have already announced that they received grants. It was expected that we will get announced through by end of Q3, around October, but we will follow up diligently before next quarter.

Let me refresh and see if there are more questions. I think I've answered all the questions for the -- for this Q&A.

We are very pleased to have so many people listening in to our webcast. We appreciate comments from our investors by e-mail, and we try to listen to what you have to say. We're working very hard. The team worked through the summer. And we have interesting news flow coming up from several portfolio companies. And once again, I would like to thank our fantastic team for being able to pull this through. Without the team, it would never have been possible.

And as we mentioned in March 2020 that future is electric. We think we've been right to have a very positive unit prices. I don't think we've seen the full effect of these higher prices in the development margins. And we have a diversified portfolio of companies and projects and thank to our Executive Chairman, Torstein Sanness, who started Lundin Energy and Haakon Alfstad and Peter Nygren. We're diligently following that strategy. We need to be diversified. We will get bad news from time to time. But with the right team, and the milestone-based payments regarding commercial development and risk management. I think we are set for a very strong dividends from our portfolio companies starting this year and increasing rapidly in 2023. So we're very pleased to be interesting speaking partner for many of the large industrial utilities and infrastructure companies in Europe and globally.

So with that, I would like to thank you very much for listening in. I wish you a wonderful day and hope you'll have a good start for the fall. So thank you.