Good morning, everyone. Thank you for coming for the one who are here presently and the ones who are following us on the webcast. Welcome to our half year results presentation. I am Robert Klein, and I'm joined by Yuni Ammar, our Deputy CEO and Sylvain Bouon, our CFO. Let's go.
I am happy to stand before you today as it is such an important moment for Voltalya's history. Before we go into details of our results with Sylvain, I would like to start with a broad overview of where I believe we stand right now. Vortal has achieved very strong growth over the past decade, supported by four successive capital increases. We have built a solid international presence. We have diversified technologies and developed recognized expertise.
Today, however, we face continued pressure on our profitability and increasing changes in the renewable market. It is still growing fast, but it's becoming more demanding and more complex. Over the last months, we've looked closely at our assets, our activities, our organization and our challenges also. The result is a clear roadmap, Spring, not to change who we are, but to unlock Voltalia's full potential in a fast changing renewable market. Spring is our five year plan to make Voltalia stronger, financially self sustained, driving better performance and profitability.
Today, we want to share with you the progress we've made and the concrete steps we are taking to move Voltalia forward. But first, I will hand over Sylvain, who will take you through the half year results. Over to you, Sylvain.
Good morning, everyone. So let's have a look to the first half year twenty twenty five results. First of all, some key operational and financial indicators to wrap up our results. 3.3 gigawatts of capacity in operation and construction, that means an increase of 7% compared to last year. The total turnover reached EUR $257,000,000, which is plus 8%, while our EBITDA is almost stable, EUR 78,000,000.
And we finally end up with a loss of EUR 40,000,000. Having a look, first of all, to operational KPIs. As I mentioned, on the left hand side, you may notice the total capacity is 3.3 gigawatts, meaning a 7% increase, which is actually doubled with regard with the production, which increased by 14%. So it's reaching 2.4 terawatt hour. In terms of exposure, on the right hand side, you can see the shares.
Latin America amounts for 51%, almost 40% for Europe, and the rest is in Africa, while now solar is reaching 71% of the total capacity. Let's look now at the turnover and how it increased and come from last year, increased by 8%. So what are the major contributions? First of all, from the EUR $239,000,000, we benefit from a volume effect for a total of EUR 4,000,000. Within this effect, you do have the full year effect of plants commission, the newly commissioned plants, while we were affected by the curtailment, but overall, net increase.
On the other hand, we had a negative effect from price linked to early generation. You might remember last year, we did explain that we benefited in Albania and France, for instance, from high price based on short term PPAs. And actually, we switched now to long term PPAs with different prices. Finally, taking into consideration the contribution significant contribution of turnover to the service, plus EUR 35,000,000, we end up with EUR $257,000,000. An overview on the EBITDA bridge.
So I was saying more or less stable. Why? You have two main contributions. One is, again, on the volume effect. So we do have the same as the one I explained for the turnover volume, though curtailment impacting and price effect with the fact that we have a different structure in term of short term, long term PPA contracts.
So per activity, now deep diving in energy sales on the table. So you may notice the decrease at constant rates by 3%, which is partially mitigated by operating expenses. Therefore, constant rate, we have an EBITDA margin, which increased by one point of percentage. While production increased, estimated average price, which is here the turnover by the total production, decreased as well. So you can see it here, it's EUR 64 per megawatt, while it was EUR 81 in the prior period.
EBITDA actually in term of regional contribution decreased in Brazil, though we improved the resources, the 14% curtailment affected the overall contribution. France also had a decrease for another reason. It's because last year, we did sell some brownfield plants, so we have a variation of perimeter. And the solar resources was not as good as it was last year. For other countries, we benefit from an increase, thanks to better resources and new commission.
Most of our results being still driven by Brazil, let's have a look on where we stand with the curtailment. As you may know, curtailment occur when the grid operator imposes to stop injecting in the grids. We did face curtailment last year from the summer till the end of the year for a total average in last year of 20% of the production curtailed. We did forecast for this year an average curtailment of 10% of the production. However, year to date, curtailment reached 14%.
What causes this gap? We have still a highly conservative approach from the grid operator. We have additional capacity which were commissioned in the Northeast, while the grid is still facing some network bottlenecks. So what do we do? Voltalya continues to be active within working group to limit curtailment and to stressen the transmission lines on long term perspective from a technical perspective.
Voltalya continues to discuss long term solution to get compensation mechanism for the future. And Voltalya continues to pursue legal proceedings to get a favorable decision on historical financial impact. As a consequence, we remain confident in reaching a favorable outcome in the midterm. No compensation were accrued in our financials. What about services activity?
As a reminder, services include construction and maintenance, which contribute to the turnover and EBITDA, of course, as well as prospection cost and sale of projects, which are recognized and visible straight in the EBITDA. As you may read on the table, the turnover significantly increased by 50%, reaching EUR 105,000,000. Total EBITDA of service activity, however, is negative, minus EUR 6,600,000.0. Why that? Actually, I just mentioned the growth activity in construction, which benefit from new contracts in Europe, for instance, Ireland.
I do mention increasing activity in O and M with also new contract won in Portugal and in Brazil. However, from the development activity, we did not book any sale of projects in the first semester. Sales and M and A projects are still ongoing, so no recognition. However, we do have recurring prospection costs, which are an expense in the total EBITDA of services activity. Overall, construction and O and M are sorry, showing a margin of respectively 912%, so a good contribution.
So let's have a look now below EBITDA. As I mentioned before, the group EBITDA, million compared to GBP 81,000,000 last year. Depreciation and amortization grew by 20%, which is mainly due to the commissioning of new plants. Noncurrent expenses doubled in euro, including here cost of spring transformation, the first part of the cost. Financial results decreased by 7%.
They are carefully monitored as we are doing for the debt. Average financing cost is stable. It's around 5.9 compared to 6% last year. Tax expenses refers mainly to the Brazilian luco prismido taxation, keeping in mind, in 2024, we did benefit from a tax income related to some deferred tax in Jordan. Finally, we end up with a total loss for the group of EUR 40,000,000, which also include some discontinuing activity that you can see here on the table for EUR 8,000,000, which refers to our equipment activities that we decided to stop and therefore to recognize all the costs within the first semester.
I'd like to draw your attention to one point. So I mentioned the effect of spring, the beginning of the effect on the 2025. Robert will detail in few slides that we run, and he already mentioned it, we run the diagnosis. As a consequence, we identified some risks or some impacts that have to be reflected in our full year financials. What kind of impact I'm talking about?
Pipeline rationalization, transformation or restructuring costs linked to the spring program, exiting some noncore activity or countries. Therefore, we anticipate but are still working to define exactly the impact, a net loss for the 2025, which will be more significant than the loss for the 2025. Let's have a look to our balance sheet and more precisely, cash flow on the bottom of the slide. You have here the cash flow statement. And as you can see, we still and we rely on a solid cash position.
The cash generation from the operations amount for EUR 47,000,000 used to finance part of the new CapEx. So investment cash flows amount to €171,000,000 while the financing inflows are stable between the disbursement and debt repayment. Overall, the cash position remained at €235,000,000 at the June '25. So now moving forward to what's going to happen the end till the end of the year. So 2025 objectives outlook.
First of all, we do confirm our operational objectives in terms of capacity around 3.6 gigawatts and the production around 5.2 terawatt hour. As of the year end, we do target an EBITDA in the range of EUR 200,000,000 to EUR $220,000,000 compared to the EUR $215,000,000 we had in 2024. Robert will now drive you to the spring journey.
Now let's move to the core spring, our vision of 2030 and how do we plan to achieve it. With Spring, VOLTAL is entering a new stage, delivering three hundred four hundred of self financed growth per year until 02/1930, while strengthening profitability and efficiency and building solid foundation for our long term ambition. But to understand why this transformation is needed, let's have a quick look back at our trajectory and at the turning point we reached in 2024. Over the last decade, as you can see, Voltaria has delivered strong growth, installed capacity, turnover, EBITDA, net result over 30% growth annually. This was made possible thanks to four successive capital increases and also a strong growth engine.
But in 2024, as you can see on the right side, profitability came under pressure with EBITDA declining and net result negative. And 2025, as Sylvain mentioned, will remain under pressure. This was a clear signal. Growth is not enough. It has to be sustainable and profitable.
And in a context context where the renewable market itself is evolving fast, becoming larger and more demanding, let's zoom in that. Globally, renewable market is growing, continues to grow pretty fast. Solar and wind, to give you some examples. Solar and wind are gaining share now providing 15% of global electricity worldwide, overtaking hydroelectricity for the first time in history. Solar also was the largest source of new energy installed globally more than coal, gas and hydro combined.
Storage capacity has nearly doubled in 2024, reaching 155 gigawatt, and the perspective are great as it attacks somehow intermittency allowing flexibility. At the same time, global electricity demand grew by 4% in 2024. Just to give you an example, it's basically the consumption of a country like Japan. This growth was driven mainly by emerging countries and also new type of consumers such as data center or artificial intelligence. Importantly, 2024, renewable provided over 90% of all new generation capacity in the world, reflecting their rising competitiveness.
But also complexity is rising. With curtailment and negative prices that are increasingly frequent, especially in major countries where penetration of renewable is pretty high, like Spain, like Germany, like Brazil. Permitting processes are getting longer and more complex, but somehow it's good for experimented developers and Vortalia is an experimented developer. Policy supports are getting lower with less subsidies, then the projects has to be more market driven, and that's good because renewable are competitive, that's because of that, we have reached 90% of the new installed capacity. And hybridization with storage projects are the future as it manage it can manage flexibility.
Then projects are becoming more complex and more capital intensive, but also creates opportunity. That's why we launched Spring, a plan that takes off from diagnosis, design and then to delivery, positioning Votala for success in this changing market. In the first half then of 2025, I arrived as in this new position and January, we will launch Spring to look to take the time to look at ourselves with an independent review. We analyzed our strengths, our challenges and benchmarked Voltage against peers, Niohene, of course, SCATEC, Boralex and other ones. And this gave us a clear picture of where we stand now.
In the second half of twenty twenty five, we moved to the design phase. We defined clear strategic priorities. We started implementing first measures. And as you will hear more about it from Yuni in a moment, we prepared a portfolio refocus. And from 2026 onwards comes the delivery phase, that means executing the transformation levers delivering 300 to 400 megawatt of self financing growth annually, and achieving sustainable improvements toward profitability and efficiency.
Diagnosis. This transformation builds on Voltalya's strengths, but also directly addresses the challenges we face. And let's have a look at it. Voltalya starts this transformation with strong foundations. We know how to develop projects successfully.
We have a strong pipeline, which can fuel our growth and create value, as we have shown in the past. We have long term PPAs that reduce volatility on our portfolio, global expertise across the full value chain and proven ability to develop complex projects. That's the good news when we are saying that we are developing and hybrid projects with storage are going to be more frequent in the future. But at the same time, we must recognize the challenges we face. Yes, we are too dispersed across too many geographies and activities, which can dilute our focus.
This explains in part the reason why our organization has become more complex. In some cases, we do not deliver our projects according to the plan and our financial results, as a matter of fact, are not yet where they should be. And Spring is about leveraging our strengths and fixing those weaknesses to build a stronger and more resilient company. How to do it? To do it, we defined two sets of priorities.
First, refocus on what matters and second, strengthening performance and profitability. I can show that now. The first priority then is to refocus concretely. We will concentrate our resources, our efforts on priority geographies and technologies, where Vortela can reach critical mass and deliver competitive advantage. We will also refocus on our core activities, development and energy sales, which are the heart of the value creation of our value creation.
And importantly, we will leverage co investment platforms to support selected activities. This allows us to to accelerate growth while preserving capital and mitigating risk exposure. This focus will generate 300,000,000 to €350,000,000 of cash inflow between 2026 to 2000 and 30 and €35,000,000 recurring savings on average during the same period. Strategically, it allows us to self finance our growth, accelerate pipeline maturation and reach scale in countries we choose to stay and to target. The second priority is about how we do operate, improving performance and profitability throughout streamline the organization to reduce complexity and cost, with expected savings of EUR10 million per year on average during the period of 2026 to 02/1930.
Second, maximize the performance of our assets, operating assets. By 02/1930, we aim at reaching EBITDA of 70% to 72% in IPP, in energy sales, and 9% to 11% for services. And third, reinforce project management discipline to ensure our projects are delivered on time and on budget. But this is not only about financials, it's also about mitigating risks in a market which is becoming more volatile, securing returns and leveraging digital and artificial intelligence tools to better and to strengthen asset management. In short, it's about being more agile, more efficient and more profitable.
So far, I have outlined the context and the priority behind our transformation. To go deeper into the different drivers actions, let me now pass the floor to Yuni, who will get you through this roadmap.
Thank you, Robert. Thank you very much.
Thanks.
Good morning, everyone. I'm very happy to be here today with you and, Voltalya is at a pivotal moment and I will take you through spring, our strategic transformation plan. I'm Joni Amar, I'm Voltalya's I'm Voltalya's Deputy CEO and after ten years in the company in several positions have been leading the development and sales of energy activities for a few months now. I will thus be accountable for a last part of the Spring project. First of all, let me give you a quick overview of Spring and how we designed this plan.
It's about four levers, four drivers and it's not just an adjustment, it is a roadmap for the next phase of Voltaria's journey. Those four phase are focusing on what we do best, clarifying our operating model, raising operational performance and ensuring profitability. All those actions are about one thing, making Voltalia stronger, simpler and more valuable. The first driver, so our first step is to refocus. How?
First, we will capitalize on Voltalia's core development expertise while exiting non core activities. As a matter of fact, few sales process have already started and is confidential for obvious reasons. As you know, Sylvain said it, we began our refocusing by closing the equipment business, which was a loss making activity. Evaluating as well to divest some minority stakes. Then we are doubling down on technologies where we have scale and proven expertise, solar and onshore wind that you know is very competitive and has the lowest cost of electricity and storage to anchor us into the future.
As you may know, it is expected that price of battery will decrease of 40% within the next five years, making storage very competitive and part of the solution of grid robustness and intermittency. Finally, we are also reshaping our geographical footprint, prioritizing the countries where we have long term visibility, market depths, a robust off take scheme and attractive returns and exiting those where this strategic fit is weaker. Concretely, we aim to remain within 12 maximum a maximum of 12 geographies within the next eighteen to twenty four months and first announcements are expected by year end. Some transaction to lower Brazil exposure are already and also initiated. This discipline will ensure that every euro we invest goes to project with the strongest risk and reward profile and emerging markets remain of interest to favor higher profitability.
Now that we have refocused on core activities, next step is to make our operating model clearer and more efficient. Look at the figures, our construction and maintenance services platform is now a business on its own, right? What's remarkable is the scale we have already achieved, 7.7 gigawatts under O and M management for external parties. So practically hitting the 2027 target of eight gigawatt well in advance. Same thing with construction, with more than 800 megawatt in execution
That's impressive and shows both the demand for our expertise and our ability to deliver. We are therefore setting up a dedicated service subsidiary, which brings together construction and maintenance businesses. This new configuration creates a clearer accountability, a better collaboration with the Energy Cell business and a stronger platform to capture third party clients. A significant EBITDA margin improvement will result in those adjustments from 7% to around 9% to 11% by 02/1930. Spring also means more comprehensiveness.
From the 2025 annual result presentation, the financial communication will be clearer with three main pillars, development, which was before mixed with construction, energy sales and services. So with a clarified model, can move to the next driver. This priority is raising our performance, making Voltalia more efficient, agile and selective in its growth. We are targeting leaner operations thanks to a streamlined organization and like Robert said, it will generate £10,000,000 cash saving per year from '26. Springs means as well more selectivity in the pipeline, focusing on project that deliver value rather than volume.
This discipline and stricter criteria will lower the cash demand for development by around €20,000,000 starting 2026, improve capital allocation and sharpen our execution. Besides, this approach will also lead to abandoning, postponing or selling projects with lower profitability than our target. Those CHF 20,000,000 are part of the CHF 35,000,000 announced few minutes later by Robert. Robert. In parallel, we are strengthening construction of our sites to shorten lead times and reduce deviation risks on CapEx.
To do so, we are reinforcing specific role in Voltalya called the asset owner. The asset owner is responsible for the equity invested the project by Voltalya and to optimize every day and on the long run its profitability. Every megawatt we operate must deliver its full potential and data driven optimization is the way to get there. We can summarize our asset management approach in three words, anticipate, simplify, standardize. On the next slide, I show you how our new approach translates in practice both in terms of governance and the way we use data to optimize performance.
So here two illustrations. The first one is the reinforced role of the asset owner and the change in project governance. Beyond the number, performance means a cultural shift in the way we are managing assets. Till now, we were doing development, financing, construction, operations, but in between there were always, I would say, some some fights or some misalignments between between teams. The global view of the project was maybe not at the highest standards we could.
Now we are moving towards to an end to end accountability model. The asset owner is responsible from the end of development through to operations. This avoid silo, smoothen and secure interface between development, construction and operation and mostly ensures strategic continuity. Second illustration, we did create recently a new data and AI department and it's about digital tools. We are working on predictive maintenance, advanced analytics, short term forecasting to extract more value from the projects.
For instance, if you see here this in house tool describe hour per hour, plant per plant, the losses we can suffer, allowing us to be alerted in real time of operating problem and thus to put in place remedial action very quickly. Ultimately, this leads into a stronger profitability and cash generation. From 2026 onwards, we will be able to finance 300 to 400 megawatt of new capacity each year entirely on our own resources without capital increase. Our energy sales activity will improve to deliver 70% to 72% EBITDA margin comparing to 6061% in 2024, while services are scaling up to a double digit profitability from 7% in 2024. Finally, through co development platform and specific co investment, we can accelerate our growth while keeping control on our portfolio and our assets.
Those partnerships will allow to share development risk in the most complicated markets and co investment in specific situation will allow to shorten our payback while derisking our position and increase equity profitability. Sylvain will now detail our financial discipline and the objectives.
Valtalia is about spring, the transformation plan we initiated. But Valtalia, it's also about fundamentals. We have said it before, we have strengths. And we plan, of course, to rely on these strengths to build up spring and to reach a new Voltalia. What are these fundamentals?
First of all, we rely on our main activity businesses with some rules, dedicated and specific models and indeed financial discipline. I'll come back to this topic right after, but it's not only development, power producer, but also services and our Elektra activity. Second, we do go for more financial agility. How do we plan to do that? We mentioned the cash from proceeds, sorry, which will both serve the future growth and allows us to come back to a targeted ratio of net debt to EBITDA by 2030 of 07/1928.
And finally, is also clear point of how do we plan to share the value creation. We have two milestones we presented and we are here highlighting. The first one is a positive net result targeted from 2026 onward. The second one is a first dividend expected in 2028. But let me come back to the first point.
I pinpoint some of them. This is the backbone of Voltalya. Development, how do we do? We explain you why we are doing development. Because developing big projects, it allows us then to resell part of it and to share the cost and to capture the value, which is definitely significant at the beginning.
Financially speaking, what does it allow? It allows actually to finance from a cash perspective the prospection, which goes to my P and L, together with the development cash costs, which are on my balance sheet. So the purpose is to say on a long term perspective, the cash allocated to Prospection and Dev is neutral versus the cash collected from the M and A of greenfield or greenfield projects. About energy sales, this work for Voltalya and also our subsidiary, Alexia. Secured and predictable revenues, thanks to long term PPAs.
You probably remember about our four KPIs on the top, but we do have sixteen point four years of remaining PPA, and we have EUR 8,100,000,000.0 future revenue contracted under portfolio. This is really a strength for Voltalyard. Of course, there are risks. How do we mitigate these risks? Here, two points.
Natural hedging, revenues and debt are denominated in the same currency and contract, revenue contract indexed or on inflation. Second point, the way we build the project finance and we finance our project, then we swap or fix the interest expenses. And this secures us future revenue on PPA, which are now working plants operating. For construction and maintenance, the strategy is really to benefit from scale effect. We have been releasing, sharing some winning of new contracts in Ireland for construction, for instance.
This is exactly what we are looking for. Scale effect with almost no CapEx, light working cap. So actually, therefore, we can have a look to the improvement and to the double digit EBITDA margin. These are really together with the spring transformation plan, what will make the new VOLTALIA. So practically speaking, what does it mean?
First of all, first step in 2027, objectives. Total capacity in operation and construction, it's 4.2 gigawatts. It means a 14% CAGR versus 2025 versus today, out of which around 3.7 gigawatts in operation. Second, we define a new target for EBITDA of EUR 300,000,000 to EUR $320,000,000, out of which 90% refers to energy sales, namely $270,000,000 to €300,000,000 But these are intermediate KPIs and milestones because spring will bring us to 02/1930. So what will be the objective?
What are the targets for 02/1930? A capacity in operation and construction of five gigawatts, out of which 4.5 will be in operation. As for EBITDA, we target a set of EBITDA margin of 70% to 72% for energy sales. Remember, I mentioned today, two. And 9.11% for services, we are on track.
Eventually, we are and we continue and will continue to be a mission driven company. What does it mean? ESG target as well. So these remain the same as the one we had before, except the first one we changed avoided emission, 2,400,000 tons of CO2 avoided compared to 4,000,000 previously, mainly linked to the capacity evolution I just mentioned before. Other ESG target for 2027 are unchanged as well as the carbon intensity, minus 35%, but with a target for thousand and thirty.
Now let me hand over to Robert for the conclusion.
So we have shared with you our trajectory for the next five years. We have planned the actions we're taking and the numbers behind them. This is not only a plan on paper. It is a road map we are going to deliver and ready to deliver. Now let me quickly sum up what's ahead.
From 2026, we target 300 to 400 megawatt of self financed growth every year supported by a return to positive net results in 2026. By 2027, EBITDA will be in the range of 300,000,000 to €325,000,000 From 2028, we expect to start distributing dividends. And by 02/1930, Voltalya will be stronger with durable growth and greater financial discipline. So to wrap up, Spring is not only about adapting to the current market. It's about positioning Vontalia for the next decade as a resilient, profitable and a focused leader in the renewable energy.
And I would like to have a final word for our teams. None of this would be possible without the patient, the talent and the commitment of the Voltelians around the world. And Spring, there are a few of them here. Spring is our collective journey and together we will make it a success. Thank you very much.
And let's go for the Q and A now. Thank you. Thank
you. Thank you, Robert. Thank you, Sylvain and Yoni. We are now opening to Q and A right now. So we will begin by the people in the room, then if any question in the conference call, and we finalize also with as there is a webcast.
We have also maybe question online, so we invite you to raise your questions now in the room.
Thank you very much for taking my question, and thanks for the presentation. I would have a first question on deleveraging trajectory that you flagged in your presentation. I think, if I remember well, to 7.5 times and eight times net debt to EBITDA. My understanding is that you will get to that point mainly through disposals and just rising EBITDA, but I just wanted to make sure I understood that correctly. So there is no equity included to get to that point.
And I was curious, generally speaking, what is to you the maximum acceptable leverage level basically? And what leads you to have this plan to lower the leverage ratio? So that's the first question. The second one is just on the 2027 EBITDA target. So I think the previous one was €475,000,000 So there is I think it's a €160,000,000 cut at midpoint on that target.
I was wondering if you could give some details on the moving parts of the 27,000,000 EBITDA and basically quantify the different building blocks to get from the previous to the new target. So I assume there is some on capacity, some on FX. I was wondering if there is any assumption on curtailment in 2027 in Brazil. So any thought on that would be quite helpful. Thank you very much.
Thank you, Artio.
So for the first part of the question, actually, the how we will get to a 7.5 to eight net debt ratio to EBITDA, it's actually coming from both increased cash from operations, which will allows us to finance part of our investments. This is for sure. And second, indeed, you're right, also from sales from some noncore activity businesses, so resulting from the refocusing. So these are the two elements which end up with a 7.5 to eight.
As for what is acceptable level, actually, we believe this is the one and this is the one we are targeting. We have been always targeting, actually. And we remain keeping on this target, believing it's the right for our business model. With regard with 27 EBITDA target, you're right, we did target it before EUR €475,000,000 normalized EBITDA. Just to refresh, normalized means what?
Normalized production based on the long term production and normalized in respect with the exchange rates, especially Brazilian exchange rate, which was built on 5.5 assumption rates. So how to go from 4.75% to 3.325%? Indeed, FX, we did review the exchange rates going for a seven exchange rate instead of 5.5. This is the first point. Second point is in terms of production.
We'd now say it's too complicated for you, for the market to monitor, so we commit for an an EBITDA which is not normalized anymore. So there is no topic about normalized production neither. So we did take, of course, therefore, this adjustment in the way we decreased, but we also have some unrealized projects that we didn't do and will not do. Why? Because either the IRR were not the one we were targeting.
And also because actually from the curtailment from the past, for sure, we missed some cash to reinvest. So this is the second part of the explanation, around about 60,000,000. Then you have the last part, which is another effect. It's about the m and a. You know that historically, we do sell lots of greenfield projects in Brazil because we have a pipeline with strong project and valuable.
We put on hold what's happening in Brazil. And obviously, we need to have a better view understanding of what's going to happen in the coming months and years. So this affected also the bridge. And last but not least, indeed, to be cautious, we include an assumption of curtailment in 2027 figures. So these are the main pillars which brings us from €475,000,000 normalized to 300,000,000 to €325,000,000 not normalized.
Morning. Philippe O'Patien, Raudot. Just one additional point concerning the curtailment you mentioned from 2027. Do we have your hypothesis? It's still 10% or it's a little bit higher than that due to 14% we have already?
Just to follow-up of the Arthur question. For myself, have some several one. Concerning the storage, you start to discuss storage. It's not something new in the industry, but you are accelerating on this specific field. What kind of business are you considering in terms of storage?
Are you discussing to fuel some end consumer during a certain period of time? Or are you more thinking about ancillary services, agreed help? That's important because it's not exactly the same business model. Or are you going to do some market merchant battery businesses? That's going to be also interesting.
And I was wondering what part of Alexia is waiting or how is the weight of Alexia in this new plan? Because it was fueling in the previous one quite strongly the solar business, and you reached 70%, which means that it has been the case in the last strategic plan, it was described as one of the main driver. Where we are with Alexia today? And the refocusing in terms of country is also in the perimeter of Alexia. That's because it has been significantly developed almost everywhere in Europe and with sometimes very low capacities.
That's the point. And the last is concerning the cash inflow. Just to be sure that in this cash inflow, the $30,000,000,350,000,000 euros are you putting in the disposal you are waiting on that? And what's going to be the magnitude of that if it's the case?
Thank you, Philippe for the questions. I will answer a few ones and then maybe I will let Sylvain to answering the other ones. First of all, it's true maybe we should have commented better about that during the presentation, but Spring is about Voltalya Group. It means it concerns Voltalya and also Alexei and also the other subsidiary and also businesses of Voltalya. Then yes, the focus of geographical print also concerns Elektra.
And by the way, we have already exited South Africa. We have in Alexia, we have already exited Senegal. And then this refocusing concerns in term of geography, also Alexia to answer your first question. Second question regarding curtailment for 2027, I think you asked that. Indeed, as Siddine mentioned, we have considered curtailment for the full period of we are talking right now between '25 and '30.
While we are considering where we do not expect, but we have considered a high curtailment up to 2027 and reducing gradually from 2028 and on. Then basically to give you some numbers, we have considered around between 12% to 15% in 2027, while we still believe that we will be able to benefit from compensation. But again, we have not considered it our business plan. Why we are believing that we will benefit from compensation? And honestly, maybe I'm a bit I'm too much optimistic regarding that, maybe because I'm also Brazilian.
But we were expecting indeed to reach an agreement with the government and also Enel end this half year, which did not happen. Negotiate has been really strong, really intense. However, we don't want to leave money on the table. Then and I'm not saying Votalia, the renewable market, the ones which are affected and also together with the help of the association, we are negotiating firmly with the government, with the wind operator, with the ANL in order to benefit from the best compensation as possible. Then I think it will happen.
However, again, I don't want to come back to you saying I want to optimistic, then we have considered curtailments at a pretty high level during over the period. And again, we expect that at least part of the losses will be compensated. Checking the other ones. Regarding storage, well, I think you have already the answer. But it's true, we are talking about transforming Voltalia, but we are not going to transform Voltalia into a volatile company, I mean, more volatile company.
We are not expecting to enter to the merchant market with storage. It's to be able to have more flexibility within our assets. It's something that we are already do basically, know, because it's been announced that in Uzbekistan, for instance, those emerging country are somehow benefiting from the return on experience of more mature country, which are experimenting curtailments. What do they do from start, they say, let's rather than putting a lot of solar and a lot of wind, let's put hybrid projects together with battery storage. And this is what we are doing in Uzbekistan.
This is what we are negotiating with the government in Egypt as well. And in a lot of countries where both?
South Africa, Italy.
In South Africa, yes, it's true, South Africa, Italy. Then the next developments are taking into account battery storage, but in order to make a bundle for less intermittency, whether for auctions, whether to supply an off taker with a more firm energy, because it's more difficult today to sign PPAs at pace demand as produced, sorry, pace as produced as we used to sign historically.
So maybe to complete Alexia, the weight remains remains around around 1212% to 15% of the total turnover. So all in all, so this is similar to to basically what we have, especially also mentioning, keeping in mind the refocusing and the spring transformation plan that, Alexa is as well doing. As far as the cash inflow, indeed, the majority is coming from disposals, but not only.
Yes, there is a question on the other side. You have the mic. Perfect.
You. I'm Rodriguez Kefler. I have two questions, if I may. The first one is on the dividend payment that you're seeing for 2028.
Is this dividend expected to continue going forward? Are you targeting a payout ratio? Or it's more of a symbolic figure and a distribution of the 300,000,000 to three fifty million euros of cash inflows that you're expected for that year? And the second one is on the exit of noncore assets that you're signaling. You signaled that probably you're going to remain around 12 countries, if I'm not mistaken.
Brazil is still a key region for you because you signaled that you're reducing your stay by how much? And what about the hydro biomass assets that you have on projects that you have on those? Thank you very much.
I will start with the last question. Actually, when we are saying about refocusing in term of geographies, I didn't think that by the way, could you about the geographies in order to be able to answer both about geographies and also biomass and hydro, which you have just mentioned. What's your question again about geographies?
What countries are within the 12 that you're signaling, which are the countries?
Which are the countries?
Are you focusing? And Brazil is considered a key region for you still or is part of the disposal of non core assets?
Yeah. Thank you for the question. Basically, consider a key country, a country where we want to stay with several criterias. One of the criteria is the size, if we manage to reach a critical size within that country. Why?
Because we believe that performance is also linked to our capability to understand perfectly the country and to be able to leverage our competitive advantages. And I believe that when we have 20 to 50 mega in a country, it cannot pay, let's say, a team which is experienced, which knows about tax optimization etcetera, compared to a team to a country where we have basically 300 megawatt and you can size the country with a team experienced team in order to grab opportunities and to do the best be the best in class in operating the assets. Then it's a matter of scale and experience that we can get from being having a kind of critical size within the country. Then this is one of the criteria in staying or not in a country, the perspective to be able to reach such a critical size. Of course, the size depends on the type of the countries.
I would say in Brazil, it would be a higher size than in other European countries, 300 megawatt could be a reasonable size in order to be able to profit from that, to benefit from that. The other thing is volatility of the country and the risk assessment of the country as well. I mean, if it's a merchant country or pure merchant country, it's very difficult to have long term PPAs, it's maybe a country even if we could do potentially 300 to 400 megawatt, maybe we will not stay or we will not go in such a country. I'm not going to be able to give you the name of the countries because there are some of course some processes going on and we are finalizing also some of the assessments. Since the beginning of the year, we have done a strategic review about each country, strengths, weaknesses, the team, the pipeline, etcetera.
In time, in due time, we will inform you about the countries. About the dividend, maybe I'll leave you on.
Yes, maybe I'll and biomass assets. What we said is that we are focusing on the future for the development on solar, onshore wind and storage. Does not mean automatically that we would sell the assets, even though of course everything is under assessment, but there is no direct link between it.
And finally, so for the dividend, indeed the way we build our plan is to be able to pay a dividend from 2028 and onwards future following years.
Everyone.
Aurelie Benoit from Jean Afrique. I would be quite direct. As you said, eight countries have been under assessment. Are there any African countries under assessment? As we know the complexity and the low profitability of some projects over there, can you try to be as direct as I've been about the answer? Thank you.
We are looking of course to African countries. Nonetheless, you may see that we are not in a lot of African countries. Definitely, are struggling with some African countries and we are having questions, But definitely the backbone of our African view is on, I would say, strong countries, South Africa, Egypt. We have a lot of success in Tunisia. So we are more into those countries.
Then country per country, we could decide to move on. Okay. Nonetheless, you have remarked that we said that emerging countries remain an access important for us in order to have a risk reward profile, which is important for us and we consider sometimes that in that kind of countries, we can have a better balance than in some others. And you but saw you saw that Alexia already stepped out of South Africa and Senegal, but that was on the Alexa side. So yes, we did some choices, on Africa.
Is Morocco at risk?
Morocco is moving, we are Morocco is a complicated country. Nonetheless, we are, I would say, between the two, three credible actors in Morocco. Teams is here, project are ready to build. So we are assessing like others, but not a specific risk.
Maybe to add, we're not saying here that they are good and bad countries, while they are. The point is here is we cannot do everything. We don't have the financial resources to do everything. Then we need to choose our battle. Of course, it's tough, we need to arbitrate.
And we need to put our efforts and resources where we believe we could have the quickest wins, a long term view and the best risk return profile. Saying that, I'm sure that you will be able to do yourself the job in order to guess which country we are going to and the other ones we are going to leave.
But really for Morocco, actually we are aiming to start construction in the coming months on our first big project, 120 megawatt of wind. So we are here.
Thank you.
Just a follow-up concerning the dividend. In the question of my colleagues, it was the kind of profile of your dividend policy. Are we discussing about a fixed payout? Or are you thinking about a kind of floor dividend like some other companies are doing with potential upside? What's going to be your view on that?
Just to help us to define what's going to be even if it's not the most significant part of your cash out, but just to know your philosophy in terms of dividend regarding your future policy and starting 2028, which is not tomorrow, but not so long period of time also?
I will say that policy on dividends should not prevent us from investing. This is the first thing. The second thing is that it's a very important signal to you within the framework of the roadmap that the company will be strong enough, the balance sheet will be strong enough, profitability will be strong enough to start distributing dividends without preventing us from investing.
I think we let's move to the webcast platform. I do have one question related to co developments and co investments. What are the type and specific activity that we can work on co development and co investment?
That's a very good question and you've seen that we emphasize that part. Basically, have built a large pipeline. We have invested a lot in the pipeline, which has let's say a duration in order to be able to mature rate. What we want it accelerate maturation with of course choosing the best ones, the ones that we believe could reach a ready to build stage quickly. But also, we want to monetize part of that pipeline.
And that's the reason why we are discussing with potential partners in order to be able to share part of the pipeline specific in specific geographies in order to be able to monetize part of it right now. Second, to also reduce the risk. And third, having a partner helps very often in order to be able to speed up or to add value in speeding up the processes. If it's a local one, for instance, it could be a help in some countries where we are struggling, for instance, for getting connections. Then the first part of the co investment is related to the development platform.
I remember you that we have 17 gigawatts in our pipeline, while we intend here to build around two giga for the next five years. Then there is a big difference, of course, we are intending to sell part of it, of course, but why not partnering with someone who can help us in order to concretize this monetization that we're thinking about. The second part of platform is something that we have been doing so far actually, especially in Brazil, where we had a big volume. I remind you that in Brazil, we have chosen to develop a big cluster, what we call Serra Branca. I remind you, it's around 2.3 gigawatt of solar of hybrid projects, maybe soon with batteries, who knows.
And in order to be able to be competitive, what we did, something that you mentioned earlier, is that we have decided to share and value of course all the developments done there. It's good for us, it's good for the partner, because in big projects like this, you have a scale effect, which makes you competitive, because you are talking about one, two hundred, 300 megawatt project, but also one of the trigger to be competitive is to be able to the substations, transformers, transmission line, here we are talking about transformer of 300 MVA, we are talking about 50 kilometers transmission line of 500 KV and two thirty KV, it's huge. With one project of 200 mega, 300 megawatts, you cannot support it. And then if you partner with someone who is also doing the 300 megawatt, you can build a big substation and you deal with the cost and you get competitive. Then we are in Egypt and you know that we are targeting a project, we have already a local partner there of more than two giga.
We are negotiating contracts in Uzbekistan of hundreds of mega, etcetera, etcetera. Then sharing together with a co investor will increase our value, will accelerate our payback. In the same time, it will allow us to be more competitive in order to be able to have the best engineering for the project. And of course, there is a question of risk that we will share also with some partners. Then basically, those are the both type of platforms we are working on, one on the development side and one on the IPP side.
So OPV, we keep the majority always or fifty fifty max?
Yes. I mean, we will keep the I will not say necessarily the majority, but at least we'll keep the control. We
have two remaining questions on the platform. One from our analyst from Santander, Oscar. In how many countries we are now compared with the target of 12? And then related to the cash flow, EUR 300,000,000 to EUR $350,000,000 from 2026 to 2028. You said cash from disposal included, but I understood the majority of the cash flow incomes from disposal, yes? So Yuni?
Yes, maybe just so on the countries. As of today, we are having teams and full structure for development and energy sales activities in 18 countries. And once we have added the countries of operations of the services and Alexia, we raised to 22 countries. The 12 countries we were discussing are more on the energy sale and development activities. Of course, it is much more mobile when you are doing construction, you can have a specific construction with teams which are centralized in a country.
For instance, Portugal as you know is a strong base for our services business and they could go for specific contracts, okay. But the 12 country of operation where you have services and development and energy sales. Then just to be very clear, in Paris and Porto, we have a dedicated bidding team, very, I would say, very lean, able to answer and to bid to big international call for tenders for IPP, for energy sales. And this would remain as it is very low in terms of expenses. So we could go and this is how we did enter Uzbekistan, this is how we did enter Egypt, this is how we did enter Tunisia from a centralized team which is bidding in a new country.
So as far as the question on the cash, so indeed we mentioned it most of the cash inflows, let's call it like this is coming from the disposals. As for the cash burn, a good way to understand what the how we want to improve, looking at '24 basically, the cash flow from operation, we're financing 30% of our investment cash flows, maximum, yes, 30%. So we want to reach 50%. After it's a matter of growth, and Voltalya wants to continue to grow. We are not saying we're going to just fully be autonomous.
So we have a target to go further. But the reach and the target we are fixing, it's 50%.
I think we have the last question in the room, and then we will let Robert conclude.
Morning. Francois Beaupuis with Bloomberg. I'd like to know how the political uncertainty in France and the lack of energy road map is forcing you to potentially adapt your growth plan and capital allocation and what sort of impact it may have for the company? Thank you.
Thank you. Indeed, there is a volatile atmosphere that we can see in France. But I remind you that I mean it's not new. It's been lasting for a few years.
Though the growth of solar and wind has not been nothing in France. I mean five gigawatt of solar installed capacity in France and one giga 0.5, 1.1, I don't remember which is pretty important. Then market in France, while we are hearing a lot of things about renewables, is still growing, still growing fast. What's going to happen in the future, I don't know. But what I see is that in many countries where there are even governments against, and I will name U.
S. For instance, not necessarily in favor of renewable, renewables reach such a competitive stage that even if government are not supporting so much renewable, it continues to grow. We saw that on Trump version one and we can see that Trump version two, except maybe some issues that some developers and investors are experimenting in offshore wind. Then we have a large pipeline in France, but I will say the beauty of the model and the one that we are refocusing is balancing the risk between several geographies. And I would say, as we are experimenting here in Brazil, and we have a big weight in Brazil, that's why that's the reason why because of curtailment we are kind of suffering.
But having 10% on one country of the total capacity is still intended the other one, we can leave with this volatility. Then basically, we're not going to put all of our eggs in France. We are going to continue to reduce the work we've been doing so far in Brazil in order to rebalance Brazil and having a less weight of business in Brazil. And this is basically the strategy we are going to do geographical wise in order to be able to support volatility fluctuation. And we know sometimes it stops and it creates also a lot of opportunities because some players are not strong enough to stay in such environment and it favors companies who finally are resilient.
And Spring is about being resilient, even more than we are today. Then I would like
Yeah. Maybe a last question.
Last question.
Dominique, prospectivist. What is missing in this presentation, in my opinion, is the relationship between the objective you are expecting and the means you need in order to obtain them. In order to better understand the what is the engine of this transformation, how efficient it is and how and what sort of fuel you need to put in such engine in order to have such result. And I'm sure you you have done some simulation to obtain such result. Obviously, you are not ready to share that with us, but it will be interesting to have a sort of prospective prospective outlook in order to understand that.
For example, you mentioned curtailment. And as you know, bigger is a curtailment, bigger is a divergence between the investment and the result. And this is not linear. Same thing for compensation, depending of yes or not, what is the impact of compensation into the result. Same thing for the choice of country.
It's not a question of geography. It's a question of how is attention into the energy system in such country. For example, for solar, it's very different between Spain, Texas, versus France, where some are ready to cancel solar, for example. And, any other, how to say, hypothesis which can have a huge impact on the result. So, the question is to better understand what is, in your view, in your transformation, what is a brand levy you want to develop in order to reach such transformation result?
Thank you. Thank you for the question. I think we have the larger part answer to your question, giving by the way some examples about what it is about in order to be able to create value, but that is fantastic way to conclude by the way your question. It's about generate strong cash flows, improving profitability while being self financed. Thanks to recurring cost saving, improving EBITDA margins, thanks thanks to that reduced leverage between 7.58% and then enable dividends from 2028 on.
And I would be pleased that if you want some details, if can disclose them to help you to understand better the plan. Anyhow, I really thank you for your questions, for being present here, for the ones who are present on the webcast. And hopefully, we will meet again with some good news regarding the roadmap and the actions we are implementing. Thank you so much.
Thank you very much.