Scatec Asa

Good morning, good morning everybody and welcome to the third quarter presentation for Skatec. Today we have the pleasure of taking you through another strong quarter of Skatec and we will also take the opportunity today to give you a bit of a strategy update one year after we presented our self-funded ROSE plan. This quarter has been another strong quarter for Skattec. We have strong financials. We have reached several important milestones in terms of growth. And we continue to optimize our portfolio through divestments and farm downs. And today, I will, as usual, take you through the highlights of the quarter. Hans Jakob will take you through the financials. And then at the end, we will also provide a strategy update. And obviously, all the way to the end, we will also take questions. So let's start with the key highlights. And I'm very happy with what we have achieved in the third quarter. We have achieved, in terms of proportionate revenues, 2.4 billion, and we have 1.5 billion in proportionate EBITDA for the quarter. Further, we have had good progress in our DNC segment. We have 631 million in revenues, and we have achieved 12% gross margin, which is well above our guided range. Further, during the quarter, we have also reached financial close in Tunisia. That is another 120 megawatts that we bring into construction. And here, we have also entered into a partnership with Aielus, which is a part of the Toyota Tushio Group. And bringing in this Japanese investor has been crucial in unlocking this project to them providing very attractive carbon-related financing to the project. Further, we are also growing our position in Egypt. We have signed the PPA in Egypt for a 1.1 gigawatt solar and 100 megawatt, 200 megawatt hours of batteries. So this is a major project and it's obviously contributing significantly to our short-term growth visibility. Finally, also in terms of optimizing our portfolio, we have made significant progress. We have signed an agreement with Total Energies to sell our Hydro Africa JV. We have signed an agreement with Suzy Partners to sell our position in Vietnam, our wind farm in Vietnam. And finally, we have also divested parts of our Round 1 and Round 2 projects in South Africa in a deal together with Stanlib. The first part of that deal was closed in the third quarter. And we expect the second part of that transaction to close most likely in first quarter next year. So then let me go to power production. In power production, we had a significant increase of 24% relative to same quarter last year. And we reached 1,254 gigawatt hours in generation during the quarter. Also on the financials, it was a significant increase. We increased the EBITDA by almost 100% to 1.54 billion, and that is compared to 789 million, same quarter last year. and the main contributions to this increase is obviously first of all the gains from the sale in South Africa of 383 million and then on top of that obviously from the new project that we have in generation in production since this quarter last year so that is Kenhart Menuhin and also Sukkur in Pakistan And also in the Philippines, we had very good performance and this also contributed to the significant uptick in terms of financial performance in the power production segment. So let me then take you through some of the details when it comes to the Philippines. So in the Philippines, we increased our net revenues to 432 million. And this is contributed by the fact that we had more ancillary services sales under the contracts that we have in the Philippines. It is secondly related to the fact that the reserves market started up again in August in this quarter. And it's thirdly related to the fact that we also recognize some revenues from the reserves market in Q1 earlier this year that we now took this quarter as these are now firm and we expect them to come in. So the EBITDA in the Philippines increased to 382 million and this is also above our guided range and it's obviously related to the factors that we have already discussed. The power production level in the Philippines is more or less in line with the power production level that we had last quarter. But given that there is an open ancillary services market, we have allocated more of our capacity and more of the generation is related to the ancillary services market than what we had in the same quarter last year. It's also very good to see that the contract volume is down to 104 gigawatt hours. It's a significant reduction relative to the same quarter last year. And this puts us in a much stronger position to handle the dry season that is coming in the beginning of the next year. And now we're getting the contract volume in the Philippines down to a comfortable level. Finally, in terms of prices in the Philippines, these are more or less in line with what we had last year. Then in terms of the construction part of the business, the D&C part of the business, we have had very good progress in the projects that we have in construction. So in Grote Fonteyn, in South Africa, in Botswana and in Tunisia. And this has contributed to 631 million in revenues and as I said, 12% gross margin in this area. In addition, we have just reached financial close of Mogoda, a battery project in South Africa. And this will then also in the future contribute to this part of the business. And we now have 565 megawatts. in construction in total. The total remaining EPC contract value amounts to 3.4 billion and our total committed equity investments amounts to 515 million in terms of the total portfolio. Health, safety and our environment is our top priority. In the quarter, we were sadly starkly reminded about how important this is and the significant risks related to transportation, as we saw a tragic accident related to one of our contractors in South Africa. A bus transporting workers from their hometown veered off the road, resulting in several fatalities and several injuries. Our immediate priority has been in this situation to support the contractor, obviously in this very, very difficult time for them, while we wait for the investigation report to understand how transportation can be further improved for them, and obviously we will also look at our own transportation approach. Then in terms of the pipeline. We currently have around 12 gigawatts still in total pipeline. And most of this is related to solar. So we have 600 megawatts, as I've already said, under construction. And this will come into generation through 2025 and 2026, where it will then start generating clean energy. Further, we have 1.6 in backlog, and we are expecting to start construction of this backlog in the context of the next nine to 12 months. And obviously, in order to be able to further deliver growth over and beyond this, we also have a 10 gigawatt pipeline that will continue to mature. And this is also largely, as I have said, related to solar and gas, and also in our core markets. So this represents a very strong near-term visibility in terms of future growth and in terms of our ability to reach our targets in the 2027 perspective. So with that, I will then hand over to Hans Jakob to go through the financials.

Thank you, Terje. Good to be here. And now let me take you through the financials. We reported proportionate revenues of 2.4 billion in line with the same quarter last year. The revenues from power production was 1.8 billion, mainly driven by accounting gain from divestments in South Africa and strong performance in the Philippines. In the same quarter last year, we reported revenues of just over 1 billion in power production, and our power production EBITDA was 1.54 billion, including a divestment gain of 383 million. Adjusted for the gain, the EBITDA from power production increased by 42% to 1.15 billion. Cash flow To equity from power production ended at 545 million. This is excluding proceeds from the South Africa divestment as these were received in October and will be recorded in the fourth quarter. Development and construction reported revenues of 631 million with a solid margin of 12%. Last year, we had significant ongoing construction activities in South Africa, Brazil and Pakistan. As you can see in the graph on the left hand side. And our DNC EBITDA was 13 million. The total proportionate EBIT increased to 1.13 billion compared to 584 million in the same quarter last year. If you look at the consolidated financials, you will see that we delivered total consolidated revenues of close to 3 billion, more than three times higher than last year. Key contributions came from new projects in operation, strong results in the Philippines and Ukraine, as well as solid gain from divestments. The EBITDA increased to 2.7 billion compared to 686 million last year, and excluding gain from sales, EBITDA ended at 1.14 billion. EBIT was 2.3 billion compared to 484 million, and the net profit was 1.65 billion, which 1.62 of them were to Scott. And the net profit adjusted for sales gains was 155 million. The total net interest-bearing debt is basically unchanged at 22 billion. We repaid some project debt, including Laos, where all the project debt is now repaid. And we drew approximately 900 million of new project debt for projects under construction, mainly Grutfontein in South Africa and the project in Tunisia. The net corporate debt was reduced by 400 million due to the ordinary amortizations and foreign currency movements. At the end of the quarter, we had 2.2 billion in liquidity, including an undrawn RCF. We received 223 million in distribution from power plants. We had 495 million in positive working capital movements, mostly related to construction activity. We invested 159 million in growth projects and we paid 478 million of interest repayments on our corporate debt. Let's have a look at the outlook. We have updated our estimates to reflect the recent sales of assets and the strong performance in the third quarter. For the full year, we expect a proportionate power production between 4.2 and 4.3 terawatt hours. We have reduced the midpoint by 50 gigawatt hours after removing production related to the divested assets in South Africa after closing the sales of the first phase. Power production for the fourth quarter is estimated to be 1,100 to 1,200 gigawatt hours. And in the Philippines, we estimate an EBITDA of 270 to 370 million, expecting average production and lower prices than the previous quarter. We have increased our full-year EBITDA guidance by 350 million to a midpoint of 4.25 billion. The increase reflects the gain from divestment in South Africa, third-quarter overperformance in the Philippines and Ukraine, and foreign currency effects. This is partly offset by lower revenues from Kaltbult, Linde and Ronberg after the partial divestment, and 155 million of revenues from the Philippines related to our ancillary services contract, which have been removed from the EBITDA outlook. We are convinced that we will receive the ancillary services revenues retroactively, but the timing remains uncertain. In the DNC, we have remaining contract value of 3.4 billion after including Mogobe Bess in South Africa. And we have also increased our expected margin for project under construction and in backlog from 8 to 10 percent to 10 to 12 percent. And now I welcome you back, Terje, to take you through the strategy update.

Thank you, Hans Jakob. So it's now one year since we launched our self-funded growth plan and obviously we continue to develop and sharpen our strategy. I think it's now meaningful to give you a bit of an update on where we are in terms of strategic priorities. But first of all, I'd like to say that we are extremely proud as a company of what we achieve and our track record in terms of our mission, in terms of our purpose, and in terms of our ability to improve our future through the business that we are doing. Since the start of this company, we have deployed 5.6 gigawatts of renewable energy on a global scale across four continents. The generation from these projects, from these assets, they represent 21 million tonnes of greenhouse gas emissions that has been avoided. And the generation from these assets represents the energy consumptions of 11 million homes on an annual basis. And importantly, also in terms of our purpose and in terms of our mission, it's important for us also to contribute to economic development locally where we are doing business. And through our projects, we have created 20,000 direct jobs around in the countries, the emerging markets where we are operating. And we are also contributing back to the societies where we have projects. through community development projects related to education, related to health, and through our projects we have contributed $20 million since we started related to these kinds of initiatives in areas where this is dearly needed. So then let me continue in terms of the update on our priorities. First of all, based on our secured growth opportunities and growth projects, we are now targeting to invest 750 million Norwegian kroners annually in new projects. This is obviously an average. And we continue to be disciplined relative to our investment hurdles. But when we look at these projects, we estimate that the equity IRR of these projects will be in the range of 15%. when we also include the services revenues that are coming into the projects and if you then also look at the gross margin on top of that which can be added this contributes another 15 so we do see that the total project related return on these projects in total will be in the range of 30 percent Further, in terms of market and technologies, the main growth that we have secured and the main focus for us going forward is related to solar and bath. And it's also related to four selected core markets, which is Brazil, South Africa, it is Egypt and the Philippines. We will continue to also develop and generate opportunities outside these markets, so we will continue with our opportunistic approach, but on a near-term basis, the main growth is going to come from these four markets. In addition, we will also continue to pursue and develop our green hydrogen projects in Egypt and develop hydropower together with our partners, Aboitis Power, in the Philippines. In terms of funding availability, we have 2.2 billion in liquidity and obviously we will continue to generate cash flow from our operating assets and also related to now the attractive DNC margins that we have presented to you today. On top of this, we will continue to optimize our portfolio. We will continue to look for opportunities for farm downs or divestments related to non-core assets. And we believe that we will be able to generate proceeds or at least 4 billion in a 2027 perspective. And then in terms of the corporate debt level, as we've said before, we are committed to bring that down and we will allocate 75% of the proceeds from divestments to the leveraging on the corporate level. And in terms of the markets, we see that there is positive development in the market, which is supporting our growth ambitions, and it is supporting our ability to create good value in our projects. If you look at solar PV modules, they have come down by more than 50% since 2022. And if you look at solar best systems, these ones have come down in cost by more than 60% since 2022. And obviously, this is contributing to lowering the cost of renewable energy. In addition to that, it is expected that interest rates will come down also towards 2027. And on this basis, renewable energy is becoming more and more competitive. It's becoming more and more competitive, especially in the markets where we operate. And it's no longer only on an intermittent basis. Renewable energy is also competitive as baseload power or as dispatchable power. So if you then look at the four core markets that we have selected, the common theme for all of these markets is that they currently have large and growing energy demand. These are markets with quite predictable regulatory schemes where we see a clear route to offtake in terms of the projects that we are developing. And on top of that, obviously, these are markets or countries where the resources for renewable energy are very strong, so renewable is a competitive part of the market. In addition, these countries typically also have strong and clear targets and also a clear need to drive the accelerated implementation of renewable energy. Also importantly, in terms of these countries, these are markets where we today have a strong position. In these markets, we have a track record. We have a local organization which is understanding the market. We have a pipeline in market. We have operating assets in the market. So we have a very strong position to continue our growth in these markets. So let's start with South Africa. So South Africa has had a credible and a predictable framework for renewable energy since around 2010-2011 through the renewable energy IPP program. And here we have also participated on a regular basis and have had regular success over time. In South Africa, we have a strong pipeline to continue to participate here. But the interesting thing in South Africa is that we also see that the private market is being deregulated and there's also then additional opportunities for securing corporate PPAs in the market. And here we have established a partnership together with Standard Bank and Stanlib to address this market that we have called Lyra. In Egypt, there is urgent need for more energy and the obvious choice in terms of providing more energy in Egypt is renewable energy with the great resources that they have. Here we also have track record. We have a strong organization in place and we have good relationships with key stakeholders. In addition, in Egypt, we also see that Egypt is a unique place for developing green hydrogen. It has among the lowest renewable energy cost globally. It has a very strategic location and it also already has an industry in terms of ammonia and chemicals production, which makes it possible to do as we are doing, doing green hydrogen on a brownfield basis. In the Philippines, we have a very strong position through our collaboration and our partnership with Aboitis Power. We have 650 megawatts of hydropower generation and this is a unique platform to continue to develop additional renewable energy assets, both battery storage to participate in the very attractive ancillary services market in the Philippines, as well as complementing the seasonal profile of hydro with solar and wind over time. But on a short-term basis, the project that we will first bring forward here is related to batteries. Then finally, in Brazil, also here we have a good organization in place. We have a track record with 700 megawatts that we have already built. It is a deregulated market, but we have also experience in closing corporate PPAs, both with Alunorte and with Statkraft, and we see a good opportunity to continue to build our business here. So we expect, as I've said, the majority of our growth to come within these four countries in a 2027 perspective. But as I also said, we will continue also to be opportunistic and you will also see projects from us in other countries. So at the end of last quarter, or the third quarter, we had an asset portfolio generating energy of about 4.2 gigawatts. Based on the secured growth that we see in construction and in backlog, this is about 2.2 gigawatts. So if you're just for divestment, this will bring us up, when we have completed these projects, to a total capacity of 6.2 gigawatts. This is obviously done before any further farm downs or divestments that we might do. So if you look at these 2.2 gigawatts, they are really at the sweet spot of our strategic ambitions. In terms of core markets, almost 90% of these projects are in our core markets where we have strong track record. More than 90% of these projects are related to solar and that's where we also have the most of our experience historically. And also, if you look at the PPAs related to these projects, in terms of the offtake, you also see that about 95% of the offtake related to these projects are related to long-term PPA contracts. And this enables us to achieve high leverage on the project, reduce our equity investments, and improve the returns on these projects. So if you look at the total sum of these projects, they represent capex of about $1.9 billion. and we are expecting to to be able to achieve about 80 percent leverage on this in terms of dnc revenues it represents about one billion dollars in dnc revenues and we are estimating to get around 110 million dollars in gross margins related to these projects so that's sort of been in the range of 10 to 12 percent dnc gross margin finally expected equity investments 155 million, so the DNC gross margin covers 70% of the estimated equity investments related to these projects. So if you then first look at the projects a bit more in detail in terms of what we then have in terms of already in construction, it is Grootfontein in South Africa, it is Tunisia, Sidi Bouzid in Tunisia, and it's the Madinara solar complex, the first phase of that one in Botswana. In addition to this, we just reached financial close in Mogova, which I have already talked about. So all in all, we are talking about DNC revenues of 457 million, and also here a gross margin of 10 to 12%. All in all, this represents equity investments of about $50 million, and we continue to optimize these projects. So we also see that we are able to implement our integrated business model in these projects, and we're able to have equity-last structures in terms of funding this project, and I will come back to that. In terms of the backlog, this is 1.6 gigawatts. We are talking about 680 million of DNC revenues and also here we are foreseeing a gross margin of 10 to 12%. The majority of the DNC revenues for the backlog is coming from Egypt and also coming from Brazil. And I think especially this solar plus best project in Egypt is a good example of how we can work with our projects that we develop with the new technologies that we are implementing and taking our ideas from one country to another country. Here we are basically taking what we did in Kenhart and we are bringing it to Egypt and we are bringing a new solution to Egypt that is fitting their needs in terms of the power situation. So that's a very good example of how we can work across regions. Another interesting example in terms of how we optimize in terms of value creation is in the Philippines. In the Philippines, we have robust cash flows, we have good financing agreements locally, and the battery projects that we're talking about in the Philippines, they can be done without Skaltech injecting additional equity. So these are funded on a local basis. So all in all, these projects, they represent a total equity investment in the range of 107 million. And also for these projects, they will mainly be structured in a way, for most of them at least, so that we can contribute the equity last. So on that note, let me then talk a bit about and spend some time on some key principles in terms of our business model. So firstly, in terms of our integrated model, we aim to control our projects through development. through financing and through construction. And this is extremely important so that we can not only take out value creation from the generation part, but also from the development part, from the EPC side, from the services side, and also through refinancing and potentially farming down projects. And it's important to say that our investment hurdle rates they remain the same. So it's 1.2 times cost of equity. It is 8 to 10% of DNC gross margin, and it's 20 to 30% services margin in everything that we do. And all our projects that we're currently constructing and that they have in backlog, they are meeting or exceeding these hurdle rates. So if you look at the chart here, when we sort of estimate the current equity IRR that we have in our projects, taking both the generation and the services into account, you see that we are in the range of 15%. And when we add, as I've said before, when we add the gross margin related to the construction part, that adds another 15% on top of the project IRR and then brings us indicatively to an integrated project-related IRR of 30% of our projects. Then it's also very important for us to manage capital properly through the construction of our projects. And this is especially important when we're moving into a situation like we are currently, where we are going in with a increased activity level on the construction side. So if you look at the first slide here on the top chart here, you see how we are managing cash flow on the EPC business part. And typically, we try to get milestone payments under the EPC contracts early on, and then we're pushing the payments to the component suppliers towards the end, either through contractual structures or through trade finance. And through that, you will see that we are cash positive through the construction side, and we come out with a positive margin towards the end. And then in terms of the funding of the SPV or funding of the project, here what we are trying to do, and as I've shown, in most cases we are able to get equity last. So that means that we start by drawing on the debt and then only towards the end we are drawing the equity related to the project. And if you then put these charts on top of each other, you will see that this provides in aggregate for us a good cash flow, a positive cash flow through the realization of the projects, which means that when we do projects in this way, which are most of the projects that we do, this is not drawing on our working capital through the construction phase. Obviously, as you have also seen on the project, it's not always like this, but this is what we aim to achieve. We are also seeking now to capture more value through being capital efficient. And obviously it is so that if you reduce the equity stake and you still will be able to take the other value capture out of the project, you will increase the value creation per equity invested. So that is very important for us and we focus on that. And there are a couple of ways of doing that. I mean, you can either do it upfront, and we are showing here an example of how you can do it upfront by a layered partnership structure, taking your net equity position down to 26%, and at the same time keeping control in the project, which I said is very important for us. And this type of structure, I think the first projects that you will see that we are trying to implement this is going to be related to our projects in Egypt that are quite big in size and in equity, total equity requirements. We can also reduce our equity stake later on in the project after they've reached operation. And an example of this is what we have just done in round one and round two in South Africa, where we're selling down and only keeping a lower equity stake in the project, still receiving services margins from providing services to the project. And this we can be comfortable to do. when the projects are in operation and we have good, reliable and long-term partners together with us. Finally, farm downs or divestments of non-core assets, that's also an important part of our strategy. And this we do, obviously, to optimize our portfolio, to provide additional funding for further growth, but also crystallize the value related to our projects. So we already have a good track record in this area. We have signed agreements of six divestments over the last 24 months. And if you look at the valuations related to the projects where the price is public, so five of the transactions, we are coming in with a valuation of about $1.5 million in enterprise value per megawatt. So we think this is a good price and we are happy with the pricing, but obviously the pricing is dependent on what country it is in, the underlying interest rates, the tariff of the project and the remaining commercial and technical lifetime of the project. But still, we see these as attractive and good prices in terms of what we've been achieving. And obviously, in addition to these five, we also have signed an agreement with Total Energies to also sell our Hydro Africa JV. And we will, as I've said, continue to focus on this. We will continue to optimize our portfolio through divestment and farm downs related to non-core assets. Our ambition, as we've said before, is in the range of one to two transactions per year. We target proceeds in the range of four billion, at least in a 2027 perspective. And as I also said, 75% of that will be allocated to bringing down debt on the corporate level. So then, let me summarize today's session before we then move to Q&A. So we have a strong financial result in Q3. We have 1.5 billion in proportionate EBITDA. We have 631 million in DNC revenues with a 12% gross margin. We see and we have secured attractive near-term growth. The renewable energy market is developing positively. Component prices are coming down. Interest rates is expected also to come down in a 2027 perspective. And this is continuing to improve the competitiveness of renewables. And we have secured 2.2 gigawatts in construction and in backlog in terms of near-term growth. And then finally, we have a robust approach to funding and we are committed to deleverage. We are seeing proceeds of at least 4 billion in a 2027 perspective and we will use 75% of that towards corporate deleverage. Thank you very much. And then I think we will open up for Q&A.

Thank you for the applause. And thank you, Terje and Hans-Jakob. We'll then start with questions. We will start here in the room. So just raise your hand if you have any questions, and then we will move on to... Yeah, we have Anders from SEB starting. Brage. Brage.

thank you um the four billion um that includes the the proceeds from the sale of african hydropower assets right and vietnam that's correct and phase two of south africa that's correct okay could you could you say how much those three transactions uh constitute of those four billion roughly uh no i can uh i think the the public information

is out there in terms of what we're ready to share in terms of information and also the Hydro Africa JV that will be announced when we close the transaction.

Okay, but is it fair to say that it's more than half?

Another trick question, you will get the same answer.

Okay, I have a second question as well. The 3.4 billion of remaining DNC revenues, could you just break it down between 24, 25 and 26 ballpark figures?

I think the majority will come in 2024 and 2025. A limited part of that will come in 2026.

Okay, and slightly higher activity in Q4 than Q3 in 2024?

Yeah, that you should assume. Okay, thank you.

just for housekeeping when you're talking about the ancillary revenues that you're not that you pushed out but you're certain that you will get that's that's a one-off payment right nothing to do with the underlying earnings from the ancillary operations you're currently doing, right?

It's a one-off. That's going to be, I mean, that's basically the accumulated difference between the tariff we are currently being paid and a tariff that we were awarded in the tender. Yeah, so it's a one-off payment on the accumulated retroactively. And then obviously we're expecting to get a higher tariff going forward.

Okay, thank you. And touching upon Uganda, I guess that you have agreed on the price with Total Energies, right? That's correct. So if it was below book, you would have had to impair it, right? At this point in time.

I'll hand that over to the CFO.

I think it's a fair assumption.

Okay, thank you. And then looking further ahead, and now that you are investing and getting your returns and you're also selling some assets. Come 2027, what would you say the run rate in cash flow to equity from power production is net of investments and divestments? Are we up or down from the current level?

That we haven't provided any guiding on. We have added clarity in this quarter. In power production, it was 545. We also said that there are some gains that will be included in the fourth quarter. And that's the visibility we provide currently.

Okay, so nothing like more on are we... going upwards or downwards in terms of total production net from sales and investments.

Well, there will be significant contributions from divestments, as we say, at least four billion.

Yeah, I'm talking about run rate, run rate from assets in operations.

I think we will have to come back to that and we can see also if we can add some more clarity. But I think the unique visibility of the near-term growth from the projects and the balance with the divestments is at the core of your question. So let's come back to that.

OK, thank you.

Any more questions from the audience here in the room? Now we have a couple of questions from our online listeners. Good morning. Can you comment on how much of the targeted NOC 4 billion divestments by 2020 have you secured already? That we have already covered. And of the 75% corporate debt repayment, does that include regular debt amortization or is it in addition to this? This is from Jörgen Lande in Danske Bank.

It includes amortization, so it's the total.

OK, thank you. Then we have a couple of questions from Daniel Haugland in ABG. Good morning. Great to see that you're continuing in the strategic direction set last year. Could you comment a bit on how you experience the appetite for asset sales at this point in time? Early in the week, we saw us divest assets at what seems to be a high implicit yield compared to local interest rate levels. Are you confident that you will be able to divest assets around a fair value?

There were two parts to that question. We continue to see good interest in good assets, and obviously we have good assets. We continue to expect to be able to sell our assets, and we will obviously only sell assets if they are at a good price.

So to follow up on divestments, you say you're happy with $1.5 million per megawatt pricing of disclosed projects. These are mainly solar and onshore wind. You also have several hydro projects in non-core assets. Are you happy with similar levels on those assets as well?

As I said, I mean, the pricing of an asset depends on so many different things. It depends on the tariff, the currency, the remaining lifetime and so on, and generation relative to capacity, obviously. So, yeah, so all of these factors will play in. And at the end, it's the return the NPV related to the cash flows from the projects that will be important for us in terms of assessing whether we are happy or not.

Two more questions from Daniel. On slide 21, you show some numbers on the targeted equity investments into current projects under construction. Given that these are equity-last financing structure, should we assume that none of these amounts have already been incurred in the reported numbers?

No, because we have some spending on the project and the constructions, the Grootfonteinen and the one in Botswana. That's an example.

OK, next one about Egypt green hydrogen in our backlog. This is the one with Fertiglobe, yes. Could you maybe say a little bit on how you think about the risk profile of this project?

Yeah, I think if you look at the project where we are currently is that we have 20 year offtake agreement on the project. We have secure permits for building out the projects, including the renewable energy part. And we are quite mature in terms of both the feed on the project, in terms of securing suppliers, and in terms of the financing process. So we are quite comfortable with the project, and obviously from a technology risk point of view, when it comes to green hydrogen and green ammonia, the good thing for us is that we do the renewable energy part, we do the green hydrogen part, together with partners. And the ammonia facility is already there. The storage facilities is already there. The port facilities are already there. And we do have a 10 megawatt pilot facility already operating. So we are quite comfortable with the technology risk related to the project.

Thank you, Terje. Another one which we touched upon a bit. What is the main driver for the strong DNC margin?

Yeah, I think we touched upon it. I mean, it has been a market where prices on components have been coming down. So that's obviously something that is contributing to some of these projects. And on top of that, it is obviously very disciplined and good execution of our EPC organization and making sure that we are able to deliver these projects on time and on schedule. And through that also for some of these projects, we are able, as we have seen, to release contingencies related to DPC contracts.

And with that, I think we have covered the remaining questions. There are some similar questions. So if there are no further questions, I think we'll just end today's presentation. Thank you all for listening. Thank you.