Welcome everybody, to the presentation of our second quarter results. It's good to see you all. It's a privilege for me to present another strong quarter for Scatec. We have had strong progress on our construction activities with visible earnings impact. We have closed the sale of Upington. We have started selling energy in the merchant market for our largest plant in Ukraine. We have divested our project in Mozambique. We have reached financial close of Grootfontein in South Africa, a 273 MW project. We also implemented our cost reduction program that we announced in the first quarter. We raised NOK 1 billion in funding for Release, gaining a strong financial partner to support the further growth of the venture. This is a major milestone for Release, really showing the, the value that has been created by the team so far.
On the organization side, I would like to welcome Mohamed Amer as new EVP for Green Hydrogen and Egypt. He has been instrumental in building the position that we have in Egypt and also building the position that we have within Green Hydrogen. Mikkel Tørud has decided to move on to other exciting ventures outside Scatec. I would like to take this opportunity also to thank Mikkel on behalf of Scatec for his long and significant contribution to the company. We continue to have strong focus on HSE during this busy construction phase. We have delivered 8.4 million working hours over the last 12 months without any serious injuries. On ESG reporting, we have published our first Transparency Act statement, while we are preparing towards the requirements of the E.U.'s Corporate Sustainability Reporting Directive, which will be applicable as of 2024.
Hans Jakob will, as usual, present the financials after me presenting the overall update. We look forward to engage with you all on Q&A after we have finished the presentation. Now let me turn to the highlights of the second quarter. Our group EBITDA reached NOK 1.4 billion in the quarter, representing strong improvements across our segments, both relative to the same quarter last year. This is almost a doubling from the first quarter. Specifically, we had good construction progress and increased the gross margin related to the EPC contracts to 12%. This follows excellent performance by our EPC teams through the quarter. This is confirming the robust planning and attractive economics of our projects currently under construction. We have reached NOK 4.6 billion in revenues in the quarter. This is up from NOK 1.7 billion in the first quarter.
We also continue to deliver on our strategy as we communicated during our CMU last year. We have closed the sale of Upington, contributing NOK 350 million to the EBITDA. We have streamlined our pipeline and focused our organization. We are progressing towards our growth objective of investing NOK 10 billion of own equity by the end of 2027, meeting our hurdle rates of 1.2x cost of equity, in addition to realizing margins in D&C and O&M. Let me repeat what we've said the last couple of quarters, we will continue to be disciplined. We will not move forward with any investments that are not meeting our hurdle rates. Now, let us zoom in on the ongoing construction at the Kenhardt site in South Africa.
We have brought with us a small video to give you an impression of the size and the dimensions of, of that project. As, as we've talked about before, this is probably one of the largest hybrid projects globally as of today. We're talking about 540 MW of, of PV panels. We are talking about 225 MW of batteries with a storage capacity of four hours. So meaning that we have almost one... Or we have more than 1.1 GWh of storage capacity on the site. All of this together enables us to deliver dispatchable energy from 5:00 A.M. in the morning until 9:30 P.M. in the evening. As you can see from the video, the site is immense. This is only showing a small part of, of the site.
Across the site, we're talking about 10 km. The site area represents 1,200 football fields in total size. We have about 2,600 workers currently on site. We are at peak construction activity level, the majority of these workers are women. Local employment has ripple effects for the local communities around and is contributing strongly to economic development. In terms of the installation, we are installing close to one million panels. We have 456 containers of batteries, and here you are seeing the battery area of the site. Each battery being a 40 ft container and weighing in the range of 30 tons. Connecting all of this, we have about 9,000 km of D&C cables. That is the same distance as from Norway to South Africa.
One of the key and important points related to this project is the fact that it was awarded to us in a technology agnostic tender. This means that we were competing with fossil fuel power plants, and this is evidence that in the markets where we operate, renewable energy is competitive not only on an intermittent basis, but it's also competitive on a dispatchable basis and a space load. Again, we are immensely proud of what the local team has been able to achieve here through development, financing, construction, and soon also the O&M team will start taking over and operating these plants.
The experience that we get from this project is extremely important for us and puts us in a very strong position to compete for similar types of projects in our markets, both in South Africa, but also in the markets where we are currently operating. The team that has developed this, these are real change makers that has come up with a new solution that has never been done before. Now let's move over to the rest of the D&C segment, because we are not only constructing in Kenhardt, and I'm pleased to see that the construction activities on all three large projects continue to progress according to plan. We recognize D&C revenues of NOK 4.6 billion in the quarter, up from NOK 1.7 billion in the previous quarter.
Further, we increased EPC gross margins to 12%, up from 11%. This, as I have said before, is based on the strong performance of the EPC team across the three projects. Kenhardt, on the right-hand side here, we have already talked about, the project is progressing according to plan. In Brazil, in the middle, construction activities had solid progress during the quarter. Main civil work activities are completed, electromechanical and interconnection works are advancing as planned. Finally, construction has continued to progress for a 150 MW solar project in Pakistan, we are expecting to reach mechanical completion of that project this quarter. Finally, the remaining contract value of our EPC contract is about NOK 1.8 billion after the progress that we have recognized in the quarter.
In these projects, as well as in Scatec in general, we apply our integrated business model with multiple revenue streams, as we are illustrating on this page. There should be no doubt that our projects under construction are generating strong returns to our shareholders. First, we have solid returns from power production on equity invested on a standalone basis. Our hurdle rate is 1.2x cost of equity for power production. Secondly, we generate strong D&C margins, which adds to the value. The margin in this quarter on our construction activities was 12%. In terms of future contracts that we have not yet entered into, we have guided on a margin of 8%-10%. Thirdly, we provide asset management and O&M services to the power plants with an EBITDA margin target of 25%-30%.
This together gives you the integrated IRR. Then over the life cycle of the project, there are also additional value creation levers. Refinancing is a lever we have already used actively, and we have refinanced the debt of projects both in Egypt, the Philippines, South Africa, and Vietnam. We can also generate further value creation through asset rotation. This we have also demonstrated through the recent transactions for Upington and for Mocuba. This means that you need to look at all these revenue streams to see the total value creation through and during the life cycle of the project. Then, let us move to power production. Our operating assets continue to provide strong, predictable, and growing cash flows, supporting our growth ambitions.
The last 12 months, we have delivered an EBITDA of NOK 3.4 billion from our power production segment, we protect the cash flows in each project from FX and interest rate variations. Around 80% of the project debt is hedged against changes in interest rates, on the project level, we match the currency of revenues and costs to avoid exposure. New assets will start to contribute from 2024, the contribution is significant. We are adding about 25% capacity on what we currently are having. The projects currently under construction, as I mentioned, they will add around NOK 750 million in additional EBITDA once they come into operation. This quarter, the power production reached 873 GWh.
This is compared to 916 in the same quarter last year, it's within our guided range on production. EBITDA increased in the segment by 55% to NOK 959 million. The main explanations were NOK 350 million from the sale of the Upington and NOK 76 million EBITDA in Ukraine and foreign currency effects. This is partly offset by lower production and no ancillary services in the Philippines, as communicated in our first quarter report. Based on new legislation in Ukraine, we started selling power from the Progressovka power plant in the merchant market, this has had a positive effect on the quarterly results for the second quarter. The start of selling in the merchant market was in June, it has only impacted positively one month of the three months in the quarter.
Additionally, EBITDA from Laos and Uganda increased by 6% due to positive foreign currency effects, and adjusted for the Upington transaction, the increase in the EBITDA is 4%. We continue to deliver on our strategy, being to grow renewables, advance Green Hydrogen, and optimize our portfolio.... On growth, we reached financial close for the NOK 2.9 billion Grootfontein solar project in the quarter. This is the first solar project to reach financial close from the REIPPPP Round 5 tender in South Africa. Our gross equity investment in the project will be about NOK 150 million, and construction is expected to start in the beginning of 2024. In July, we signed a land agreement for development of 5 GW wind project in Egypt.
This project is intended to be implemented in phases, and we're still at the early stages of development. In South Africa, we are using our portfolio of projects in development to participate in a number of different tenders. We're talking about tenders for solar, for wind, and for battery storage, and it's both public and private tenders that are ongoing there for the time being. Finally, we also signed a PPA for a 300 MW wind project in India with SECI. On optimizing our portfolio, we closed the sale of Upington Power Plant, and in July, we signed an agreement to sell our share in the 40 MW Mocuba Solar Power Plant in Mozambique for NOK 85 million.
We have also implemented in the quarter, the efficiency program to focus our organization with a target to reduce annual operate-operating costs by NOK 150 million. Across the organization. This NOK 150 million is compared to the cost level in the first quarter. We have further high-graded the pipeline to 12.2 gigawatts, with focus on timeline, maturity, and value creation of the individual projects. Finally, we reached a major milestone for Release, as I've said, raising NOK 1 billion to accelerate growth, and we are now establishing Release as a separate platform. Scatec is committed to improving our future through d- driving the clean energy transition in a responsible way in emerging markets. One approach that we have developed to speed up this transition is Release.
It's a lease concept based on a redeployable solar PV and battery storage solution. I'm excited that we have signed an agreement to raise $1 billion in funding for Release to accelerate its growth ambitions. I want to congratulate the Release team to bringing that concept to this stage, now seeing visibly the values that have been created, and these are also real change makers. We are establishing a strong partnership then with Climate Fund Managers that will contribute with $55 million in equity for a 32% equity stake in Release. They will also provide a shareholder loan totaling $47 million.
This transaction is in line with our strategy and will establish Release as a strong and independent platform, and it will give a financial foundation for Release to meet the strong demand for its flexible solutions, and leasing solutions. Scatec will continue to be a majority shareholder in Release, with 68% ownership stake. Release has now projects in operation and under construction in Cameroon, in South Africa, in Mexico, and in South Sudan, with a total capacity of 47 MW, solar PV and 25 MW of storage solutions. On top of that, Release is maturing its pipeline, and we see a strong growth potential for Release with good traction in the market, particularly towards African utilities. New contracts has already been signed, and Release is working closely together with the IFC to secure further growth.
Finally, when it comes to Release, we have a strong management team in place. Our Release CEO, Hans Olav Kvalvaag, will be joined by company and industry veteran, Torstein Berntsen, who will take on the role as the CFO of Release. With that, I will then hand it over to Hans Jakob, who will take you through the financials.
Thank you, Terje. Good to be here. Now let me go through the financials. We had a solid construction progress in the quarter, which is one of the main drivers for the increase in revenues and EBITDA. To the left on this chart, you see the D&C revenues, which increased to NOK 4.6 billion, compared to NOK 25 million in the same quarter last year. Revenues from power production was NOK 1.2 billion, compared to NOK 817 million in the same quarter last year, a 43% increase. This is including the NOK 315 million contribution from the sale of Upington. We've had a solid increase in EBITDA of, to NOK 1.4 billion, compared to NOK 517 million year-on-year.
The main contributor is power production of NOK 959 million, compared to NOK 617 million year-on-year, a 55% increase due to the sale of Upington and contributions from Ukraine. The underlying increase, adjusted for divestment, was 4%. The D&C segment delivered NOK 461 million EBITDA, up from minus NOK 81 million last year. The gross margin, as Terje said, increased from 11%-12% compared to the previous quarter. The corporate EBITDA decreased by NOK 34 million, mainly driven by non-recurring costs related to the cost efficiency program. Services EBITDA increased by 65% to NOK 33 million due to foreign currency effect, asset management services to projects under construction. Now over to the consolidated financials. The total revenues increased by 47% to NOK 1.2 billion.
Revenues from power sales increased by 18% to NOK 848 million, mainly driven by increased contribution from Ukraine and positive effects. The sale of Upington contributed positively of an accounting gain of NOK 744 million. Net loss from JVs and associated was reduced to minus NOK 362 million due to lower production and absence of ancillary services in the Philippines, and a NOK 350 million impairment in Argentina. In Argentina, we have a JV with Equinor on our solar plant. Equinor has provided a non-recourse bridge loan that must be refinanced. Given the increasingly challenging political and economic situation in Argentina, the refinancing has not been possible, and a sales process has been initiated. We now have received offers from potential buyers, which came in significantly below the current book value of the project, and thus, we have took an impairment on the asset.
The operating costs increased by NOK 37 million, mainly due to the non-recurring cost related to the cost efficiency program, NOK 6 million underlying. Finally, adjusted for these one-offs, revenues and EBITDA were broadly in line with last year. Our financing consists of the two main elements, debt on project level and on corporate level. The project level, where the financing sits within the SPV for each individual project, has no direct support or from or recourse to corporate. The debt is serviced solely by the cash flow from the individual power plant. In return, we get dividend payments from our projects to service our corporate debt. Total proportionate net interest-bearing debt was at the same level as the previous quarter of NOK 20.3 billion. In total, we drew new project debt of NOK 1.6 billion for project under construction.
These projects will generate around NOK 750 million EBITDA once they are up and running. We had a reduction in project net debt of NOK 900 million related to Upington. We amortized NOK 500 million. Finally, we paid NOK 148 million in interest expenses on our corporate debt, an increase of NOK 80 million year-over-year. We have a solid liquidity of NOK 3.7 billion. This including our unused revolving credit facility. In the graph, you see the movement of the group's free cash flow. In the quarter, we received NOK 180 million in distributions from our operating power plants. We generated NOK 366 million of cash flow from D&C, driven by the strong construction progress. We generated NOK 27 million of free cash flow from the service segment.
We had NOK 209 million in corporate costs, including interest expenses on corporate financing. Our working capital increased by NOK 165 million, mainly related to construction activities. We invested NOK 434 million in growth activities, of which NOK 413 million was invested into projects under construction. We received net proceeds of NOK 546 million from the Upington sale. Finally, we paid NOK 308 million in dividend to our shareholders. We are reiterating our NOK 10 billion equity target. Efficiency and capital discipline remains a priority. The first pillar is strict prioritization, more emphasis on capital efficiency, value over volume, staying committed to capital discipline. Only project with attractive margins will be brought to financial close, targeting a 1.2x the cost of equity.
The second is asset rotation, divesting core and non-core, given the price is right, like we just did with the sale of Upington and Mocuba. The third one is high-grading the pipeline, as we have taken out projects that do not longer meet, match our criterias. Lastly, a lean organization. In May, we announced a target to reduce the annual operating cost by NOK 150 million across the organization, compared to the Q1 level. During the quarter, we implemented the program, including closing offices and staff reductions, and we will continue to stay cost-conscious. We have updated our outlook. Let me explain the guiding of the four segments. First, power production. The full year 2023 EBITDA estimate from the power production is increased by NOK 250 million to NOK 3.1 billion-NOK 3.4 billion.
This is driven by the actual second quarter performance, including the sale of Upington. It is revised estimates for Ukraine, the Philippines, and Laos. Consequently, we have reduced the proportionate power production by 100 GW to 3.400 GWh -3.800 GWh . In the third quarter, we expect EBITDA from the Philippines to be in the range of NOK 180 million-NOK 240 million, reflecting lower prices and limited ancillary services revenues compared to the same quarter last year. A settlement of the disputed water fee charges of NOK 40 million, payable to the National Irrigation Administration for the lease of the Magat Dam in the Philippines. Development and construction, the remaining contract value is at NOK 1.8 billion. We reiterate the expected gross margin between 10%-12%.
For new project, as Terje said, we estimate a gross margin of 8%-10%, as previously communicated. I've also done some minor changes to services and corporate, and now I leave it to you, Terje, to sum up the presentation.
Thank you. Yeah, thank you, Hans Jakob. Summing up, we have delivered a very strong operational quarter, with a 55% EBITDA increase in power production compared to the same quarter last year. Obviously, a significant part of that was also related to the Upington sales. We have also had a very strong quarter on the D&C, in the D&C segment, with strong construction progress, and then NOK 4.6 billion in revenues and a gross margin increased to 12%, which shows the underlying good performance on our EPC activities. Lastly, we are seeing good progress on our strategic initiatives to optimize our portfolio and become an even more focused and efficient company. With that, we will go over and take your questions. Yeah.
Okay. Yes, we will start with the participants, in the room, and then we will move over to our online, listeners. Jørgen ?
Thank you very much. Jørgen Bruaset from Nordea. On the revised EBITDA guidance and power production, you raise it by NOK 250, but you also book a gain from Upington of NOK 315. You mentioned sort of the contributors to the developments there in H2. Maybe you can quantify what you expect in terms of Ukraine, which seems like a bit of a black box for us from an outside-in perspective.
Yeah, in terms of Ukraine, we don't have any further detailed guidance on, on how, the EBITDA in the Ukraine will look for the rest of the year.
You still have a positive EBITDA contribution in Ukraine for H2 in the aggregated.
Rel-
-Guidance?
Relative to what we had last year, yes.
Okay, thank you. Then maybe also on, on Release, which seems like a very interesting deal, both in terms of accelerating this and also in terms of raising capital in the current market. Are you able to say anything more about the rollout plan going ahead on how to deploy the capital, potential ambitions shared with the new owner? Also if there are any details in the shareholder agreement in terms of them also supporting for more capital beyond the current round, if and when needed.
Yeah, to start with, your last question, there is no commitment, specific commitment beyond the existing capital that they are contributing, as we have talked to, talked about here today. In terms of the growth ambitions and what we see from Release going forward, Release continue to have a good pipeline of interesting projects, and we see especially good opportunities both in Chad and, and repeat business in Cameroon. Especially in Cameroon, it's quite interesting because we see that the, the local utility really likes the solution that Release is providing, and through that we see an interest in repeat business. That's very comforting and, and promising.
Okay, thank you. Just final, final one from me. In terms of the situation in Argentina, is the impairment driven of your willingness to, to divest at lower price than, than expected before initiating the process? Or is it just for accounting purposes to, to, to have a prudent accounting in terms of mark to market? And should we read anything into that specific situation in terms of other processes for, for asset disposals?
No, I think we all have to recognize that Argentina is a unique situation, also from a political and economic development. I mean, the country is, is in, in a quite dire situation, so there's, there's no reason to, to, infer anything for other asset relative to what is currently happening in, in Argentina. Argentina is a very unique and, and specific situation. The impairment is based on what we've seen in terms of, offers coming in, and, and, based on that evidence, it is prudent now to take the impairment.
Okay, we would be wrong in extrapolating that into sort of lower appetite for secondary assets in, in a broader context?
Yes, I would think so.
Thank you.
Andreas Nygård, Kepler Cheuvreux. You stated in your 2022 CMU that you had a NOK 2 billion-NOK 3 billion funding gap to reach your, your growth targets. Now you've sold Upington and cut your dividends somewhat. Where are we now in terms of that funding gap? How much remains?
Yeah, that's, that's correct. At the CMU, CMU, we also talked about the fact that we do have a toolbox to work on in terms of closing that funding gap. I think we've been working actively on that since the CMU. As you said, we have sold Upington, we have reduced dividends. We have now also implemented the cost efficiency program. Those obviously are positive effects relative to the funding gap. On the flip side, unfortunately, there have also been a macro development where we have had increasing interest rates. We have also refinanced our debt and have certain increased amortizations there. On a net, net basis, we have improved and narrowed the funding gap. We don't have a new figure to come out with now.
Okay. Thank you. You, you mentioned your toolbox, and as you've stated before, you are intending to sell some non-core assets. I guess you, you cannot give a figure, but some feeling on how much of this funding gap is possible to reach with further sales, and I guess also refinancing some assets is one of the key tools in your toolbox. Could you give any flavor?
As you said, I mean, we, we have talked about continuing to look at recycling capital. It is an important part of our, our strategy. We have also said that the, the main focus in terms of recycling capitals, the, the first priority is to do it related to our non-core markets. If you want to have any type of indication of where that kind of activities might happen first, it would initially be in our non-core markets.
Okay. Thank you.
Anders, SEB. firstly, on, on, on Argentina. Will you sell Argentina?
That, there has been a sales process that has been initiated, and, and obviously, today, we cannot, see and know exactly what the result of that sales process is going to be.
Okay, it's not decided yet?
It's not decided yet.
Okay. Equinor is... You have, you have no, absolutely no recourse to the debt that Equinor has provided as a shareholder loan to that asset, right?
There is no recourse. Exactly.
secondly, on revenue reserves for D&C in 2024, have you stated in the report what that is?
Revenue reserves?
Yeah, contracted revenues for the Development and Construction segment for 2024. You said NOK 1.8 billion for the rest of this year, but there are some contracted revenues secured for the Development and Construction segment for next year as well.
No, we haven't specified that. I think, I mean, what we have said is that NOK 1.8 billion is what remains on the contracts that we currently are implementing. That is related to the three projects that we have under construction. Then we've had financial close on Grootfontein.
Mm.
There, we have provided a figure of the total CapEx.
Mm
... For that project, but we haven't specified the EPC contract value related to that project yet.
You've indicated how large share of that contract you will be, EPC responsible for, so that math is.
The, this project, the Grootfontein project, we will have our traditional EPC contract structure, where we will, we will take the full EPC contract.
Mm. Okay. That NOK 1.8 billion on these three projects, previously, you've stated that these three projects would be completed within year-end 2023. Is that still the case?
Yeah, that's still the case.
Mm.
Around year-end, we've said there might be some activities also running into Q1 next year.
Mm.
Most of this will be done by the end of the year.
Mm. The Grootfontein project, that's 15 months construction time, as you previously indicated, or is that?
That, construction, I don't think that we've been out with the construction. That would typically be in the range for a project like this, 12 to 18 months.
Okay. Then I have a, a CFO question. What's what's the correct amount of debt on the holding level of a company like this, with the growth prospects and the, and the, -
Mm
Yeah, attractive future, which will tie up capital?
We are comfortable where, where we are.
Yeah. If not, you will probably do something about it, do you think is the ideal situation to be, to have a lot of debt on the holding level, or should that be limited or could that, to any point, restrict your ability to pursue those opportunities?
I think we have seen debt as an enabler for business, and we are comfortable with the current debt level.
Okay, thanks.
Jørgen Bruaset, Nordea. Just following very short on Anders' questions on D&C. Of the NOK 1.8 billion remaining for this year in terms of revenue, are you able to say anything about how that's split between Q3 and Q4?
No, I don't think we are giving any specific guidance on that. As we have previously talked about, the EPC progress will typically follow an S-curve. Now we have certainly been on the steepest part of that S-curve, and now the S-curve will flatten out. I mean, typically, we would see a bit less in Q4 than in Q3 as the S-curve flattens out.
Perfect. Thank you.
Okay. We'll take questions from our online listeners. We have three questions from Magnus Solheim in Fearnley Securities. "Can you comment on the NOK 150 million cost program? Will this affect growth in any way? Is the growth target unaffected despite this?
The NOK 150 million cost reduction program is not impacting our growth targets. With respect to the NOK 10 billion, we aim to invest as own equity between now and or between 2023, 2022, and 2027.
Next question from Magnus: "If you exclude the NOK 350 million operating gain, can you comment on what other changes you have made to the full year 2023 EBITDA guidance? Is this mainly related to the Philippines?
I think I commented on that in my presentation. Argentina is... No, Ukraine is up due to the performance of the starting of the trading operations, overall good performance by the team. We're also seeing in the first half that Laos performed a bit better, but the updates on, on Laos is on the negative side for the second half, so with the ancillary services of the Philippines coming in late, 3 Q.
Last one from Magnus: "How do you see construction activity in 2024? Which project do you see as most likely to be constructed first?
As we have said, already, we have already reached financial close for the Grootfontein project. That means that we already have a project ready that will be constructed in 2024. Beyond that, we will continue to work on our backlog and the mature pipeline to bring also more projects into construction for 2024.
We have a couple of questions from Eivind Garvik. I think we have covered most of them, but we have one at least: "Can you say a little bit more about the 300 MW PPA signed in India? Why isn't this project in backlog, and when do you expect an FID?
Yeah, in terms of the project in, in India, when... Moving projects into backlog, we have a number of different criterias for doing that, including that they should be 90% likely to, to, to happen. Signing PPA is one of the criteria, but we also have other criterias related to the maturity of the development activities of, of, of the projects. According to our internal criteria, this has not quite gotten to that level yet. In terms of the timeline of the project, this is a project that could reach financial close in 2024, if moving forward.
Thank you. A follow-up on the efficiency program from Eivind: "When do we expect to see the full effect of the program?
As we have said today, we have implemented the major part of the efficiency program already. We have taken the charges related to the efficiency program. We also communicated that the full effect of the efficiency program will be seen in the first quarter of 2024.
Thank you. A couple of questions from Naisheng Cui from Barclays. Let me just see. I think we covered most of them. Yeah, I think actually we covered those questions. Let me see then if we have anything else. I have one from Thomas Næss, Pareto Securities: "Why are the ancillary services revenue expected to be lower in the coming quarter versus last year? Weren't the new contracts supposed to be better than the ones you had last year?
I think in terms of the adjustments that we've done on the ancillary services, revenues for the second half, those are obviously impacted by the fact that now we see ancillary services coming in towards the end of the third quarter, and therefore, the revenues for ancillary services for the whole second half is likely to be lower than what we had last year.
Okay, thank you. Thomas also had a question on Argentina. I think we covered that. Follow-up from Nash: "Could you please comment on the Philippines' power prices that decreased significantly quarter-over-quarter? Why? What's the outlook for second half?" I think we have covered the second half.
Yeah, I think we can just repeat what we've said...
Yeah
... That, we are forecasting lower power prices in the Philippines, in the second half, and that has been included in our outlook for the second half.
Compared to the previous year? Yes.
Compared to last year.
Okay, that ends the Q&A. Sorry, we have one from, one more from Anders.
Yeah, just, I think you mentioned during your prepared notes that, you had 1 month of revenue recognition in Ukraine in Q2. Was, was that the correct interpretation?
That's the correct, yeah.
Okay, and Ukraine contributed with NOK 76 million-NOK 78 million in the quarter?
Yeah.
Okay. And how has that developed into Q3? Have you had revenue recognition throughout August?
Yeah, just to, just to explain exactly what's happened in, in the Ukraine. In Ukraine, there was a new legislation that was passed that allowed you to step out of the feed-in tariff contract with a guaranteed buyer, and potentially also step back in again at a later point in time if you wanted to. We have for Progressovka, which is our largest plant, that also has the lowest feed-in tariff, stepped out, and that became effective as of 1st of June, and we are continuing with that situation, and we've continued to sell on into the merchant market for Progressovka through July and August, and we'll continue to do that as long as the market conditions are as good as they are today.
The good thing with the merchant contract is that we are paid 100% immediately. While when you are selling to the guaranteed buyer, we are receiving typically in the range of 40%-60% payments.
I think that ends the, the Q&A and the presentation. Thank you, everyone.
Thank you.
Thank you.