Good morning, everybody. This time out of my home office, I would like to show you the numbers of the fiscal year 2019. Thank you for joining today. Before I start with the presentation, I would like to share with you an outline of the presentation and the procedures of today's call. I will start with an overview of the operational strategic highlights of the fiscal year 2019, followed by the status of the voluntary public takeover offer by Morgan Stanley Infrastructure Partners. After that, I will comment on our full year figures. I will conclude my presentation with our outlook for the remainder of the year and on the strategic going forward. As always, we will then open the line for the sell-side analysts only. All other participants will stay in listen-only mode as it is our company's procedure for years.
As usual, our slides that I will use can be found on our investor relations website. Starting with page three, you can see that we had a favorable year with 450.8 MW of wind onshore projects sold, put into operation or started construction. This is the highest amount ever PNE has developed. For us, it is driven also by scale-up and internationalization. You can imagine when we started this strategy in 2017, we talked about processes and to optimize our organizations, which we did in this time. That means all internal processes are in place. We have all companies in one organization line, which now we see as one result that the efficiency has grown.
In one day only, we moved the company into home offices and it runs very well. We also expanded our, in terms of scale-up and our strategy to be a clean energy solution provider, our PV pipeline, and we internationalized our service businesses to Poland, France, and Sweden. Additionally, we just decided not to sell our sale of the wind farm portfolio 2020. Instead of that, we would like to do the expansion of our own generation portfolio up to 500 MW by 2023. I will come back to this. This all leads to numbers which are on the higher end of our guidance or where we slightly exceeded. You see the EBIT is at EUR 19 million and the EBITDA at EUR 31.6 million. EBIT guidance had been EUR 15 million-EUR 20 million, EBITDA guidance EUR 25 million-EUR 30 million.
Together with the other numbers, which I will show you afterwards, supervisory board and board suggested to come up with a dividend and for the AGM for EUR 0.04 per share. We look to the next page five. Two weeks ago, we have announced that we will expand our own power generation portfolio and not continue the sale of our wind farm portfolio 2020. The comfortable liquidity situation and the significantly increased project volume open up new opportunities for the PNE Group. Change framework conditions and favorable financing options have supported this decision. The management board and supervisory board of PNE AG have therefore decided to strengthen the internal operation of wind farms. This is intended to further consolidate sales and earnings as already envisaged in our strategy with the scale-up concept. This can now be done earlier than planned.
The wind farm that has been developed and are already being operated as part of the wind farm portfolio 2020 will be retained in the company's own portfolio and operated by the company itself. The sale of the wind farms in portfolio will therefore not be pursued further. With the decision to strengthen our in-house wind farm operations, we are consistently implementing the strategy orientation of the PNE Group. This is intended to further increase sales and earnings as already envisaged in our strategy with the scale-up concept, and to reduce the usual fluctuations inherent in project development. This can now be realized earlier than originally planned. We will retain the wind farms that have been developed, built, and already operated as part of the wind farm portfolio 2020 in our in-house operations, manage them ourselves, and benefit from regular income from electricity generation.
PNE currently operates wind farms with an installed nominal capacity of 130.1 megawatts itself. This also includes the projects that were previously earmarked for the planned portfolio. The plans are to expand the portfolio of internally operated projects, primarily in Germany, to up to 500 megawatts by the end of 2023. We see just right now we came in the year 2018 from 76.9 megawatts, and we now have a portfolio currently at 130.1 megawatts. The aim is also to achieve the medium-term EBIT target of EUR 38 million-EUR 44 million until 2023. Just right now, the power generation total output is at EUR 90.4 million in the fiscal year 2019. On the next page, a short overview about the voluntary public takeover offer of Morgan Stanley Infrastructure Partners.
The entry of a new major shareholder into the company share register beginning this year was a particular event for us as board of management, but also to the supervisory board during 2019. Photon Management GmbH, a member of Morgan Stanley Infrastructure Partners group, submitted a voluntary public takeover offer to PNE shareholders at the end of October 2019 and now holds roughly 40% of the shares. The circumstances of this voluntary public takeover offer I presented the last time. Coming back to the operational business. We could increase the pipeline projects to 5,235 megawatts. As you see the table, we now have a new column, which is shown as sold to services.
This means sold, but construction management services by PNE, because we have often the projects sold already, and then we do the construction management, and that's what we wanted to show to give you a better overview and the analyst a better overview. In the last year, we had to face some delays in the permitting process in Germany. Nevertheless, we could construct and finalize Gerdau-Repowering, Schlenzer, Kittlitz, Neuenwalde, and Roseckendorf. This is which was sold last year. Project in France, Project La Pierre. We sold projects in Sweden, Målarberget and Laxoskogen, the last project, which was completed last year. The biggest project in Poland, Jasna, 132 megawatts was sold to Stadtwerke München and will be finalized beginning of 2021. We made a construction management for Bavita, 42 megawatts, which is finalized now. In Panama, we acquired five projects with an amount of 352 megawatts.
We sold a project in the United States with Berley. Remarkable is that we have in Germany and France a total amount of 622 megawatts in phase 3. This is the biggest amount ever we had in this phase. Despite the delays in the permitting process, we think this is a good basis for the future business. On the next page, the first time we can show the project pipeline PV with an amount of 123 megawatts, which we have in the phase 1 to 2, in Germany, Romania, and United States. You see that we are working on this. In the moment, we are think about projects in Germany, France, Italy, Romania, and United States for PV, and we're working on numerous projects on this, and we think that we can increase this amount by far in this year.
When we look to the next page to the results, the total output has increased. The EBITDA has increased. The EBIT has increased. Everywhere we have a strong increase, if you take the numbers of 2019 opposite to 2018. With the total output for EUR 174 million and the EBITDA of EUR 31.6 million and an EBIT of EUR 90 million. This was mainly driven by the project sales in Poland and Sweden and a bigger project in Germany called Wolsekenndorf. As well, the first time we saw a bigger amount of the results from the power generation, and additional, we see that services increased turnover as well. We have to consider that financial results burdened by high interest expenses due to valuation of interest rate swaps by an amount of EUR 4.3 million. Looking to the segments, we see that all segments increased their earnings as well and their turnover.
If you look to the project development, the output grows to EUR 154.4 million, which is a plus of 57%. The EBITDA grows to EUR 25.5 million, 221% and opposite to 218%. The service output grows to EUR 18.4 million with a plus of 55%. EBITDA increases to EUR 5.2 million. Electricity generation, the output increases to EUR 19.4 million, which is +6%. The EBITDA increases slightly. This was a special situation because we had a one-off effect of EUR 4.2 million last year. If you wouldn't consider this in this amount, then you could see that we could increase the output by far. What you can see, we see more and more that EBITDA will be our future factor where we have to look at because of the high depreciation.
The balance sheet remains rock solid is the title of this page. This is as well shown in a good cash position. We have still EUR 111.9 million as a cash position, which is very solid and is very helpful just right now. Especially in this coronavirus times, it's good to have this good cash position in place. The equity ratio is solid at 39%. You see due to the investment in the portfolio, the liability to banks increased to EUR 135.6 million, which is mainly project financing, which is non-recourse. You see the impact of the IFRS 16 leases with liabilities from leasing contracts, right of use, we had to add EUR 37.2 million. The current liabilities are projects under construction. We see there that there are many projects financing as well, non-recourse projects. Looking to the next page, you see that we have our process of scale-up.
I already mentioned it, that we are fully in plan, with one exception, which we have to change. The sale of the 200-megawatt portfolio share will not be done. Start of the build-up of the next portfolio for the next years will not be done as well. This will be all projects for our own portfolio. This will be changed. This is the extension of the strategy we placed already in 2017. If you look to the outlook, we have to look also, I think in general, where we have to say something about the coronavirus. The topic of the last weeks had undoubtedly been the coronavirus. For us, even if we have to be very optimistic, we can't oversee the possible consequences for society and market resulting from the current development concerning the spread of the COVID-19 virus.
We respond to the threat with a large number of measures to protect employees, as you heard already, everybody's in home office just right now. Also to safeguard the implementation of projects as well as supplies. At the time of publication of the 2019 annual financial statement in March 2020, we assumed that there may be shifts in our operating business as regards the sale of project rights and project implementation from 2020 to 2021, and from 2021 to 2022. That there will be no significant impact on our business in the medium to long- term. The good liquidity positions gives the company sufficient way to be able to cope well with longer- term restrictions.
We have to say, in general, I think the climatic change issue is in the moment not in the first row, but I think it will come back very soon because the first time we see what may happen if the whole world is impacted by one event. Renewable energy will therefore have a good future as well. What will we do in the next time, in this year? Increase our own generation portfolio, as already mentioned. We see a high project activity. We have a lot of megawatts under construction, 311 megawatts. We have a very good filled pipeline and we see that we can expand in new markets and see opportunities there as well and in services according our scale-up milestones. Therefore, we see a guidance from EBITDA of EUR 15 million-EUR 20 million and an EBIT of EUR 5 million-EUR 10 million.
In this number, we consider a delay of three months due to coronavirus, a delay in deliveries or in anything what can support construction or permissions. Ladies and gentlemen, this concludes my presentation. Thanks for your attention. We are now open for questions.
The first question we have is from the line of Karsten von Blumenthal from Equity Research. Please go ahead.
Karsten von Blumenthal from First Berlin. Good morning, Markus. Greetings from home office too. I hope, and I hear that you are well, that is good to hear. Of course, everything is at the moment focused on the pandemic and you have already explained that you are carefully guiding for the year. What I would like to know, because I had to look at the Bundesnetzagentur this morning regarding the March tender results, and they do no longer publish it. My question is, did you win anything in the tender? Did you take part in the March tender or what was the result for you there?
No, we didn't come up with a project that is tender. The last tender we had been successful with two projects of around 14 megawatts. This time we haven't been in the tender.
Okay, thanks for that. When I remember rightly, you have 58 megawatts of awarded German projects.
Yes
which you can build now. Do you already know how many of these projects or how many megawatts will be added to the own plant portfolio? All the projects or a certain percentage do you also plan to sell? This is of course important for us analysts because we have to get an idea of the split between projects sold and projects added to their own plant portfolio.
Sure. Let me summarize it. In the moment, we have projects in France, Poland, Sweden, U.S., Italy, Romania, South Africa, where we are nearly in the stage of ready to be built so that they can be sold. We think this amount is enough to confirm our guidance or to get our guidance and the portfolio at the moment of around 60 megawatts should be a part of our own portfolio.
All right. That is very helpful. Do you expect to complete the 58 MW this year? Probably not everything. Do you have an idea how many of the projects could be completed by the end of the year?
Yeah, this is especially
Yeah, I know.
In this moment, difficult to say. Just right now we see that the permitting procedures runs in the right direction. Everybody's working. You see that this goes slower. Secondly, we have to see and have to face that the deliveries of the machines can be delayed. At the moment, we can't say if we can get them done all this year. What I can say, we are going to start construction this year for these projects. In this term, that's what I can confirm.
All right. That is already helpful. Thanks for that. When I look into your service business, you increased external sales significantly, of course, because you also purchased a few companies, now you have roughly EUR 16 million in external sales. For this year, 2020, do you have a rough idea? Will the service business grow further this year? Due to COVID, do you expect it to be stable? In the medium term, what do you think is a normal EBIT margin for the service business?
Yeah, the numbers are numbers which are mixed numbers, because it's numbers where we do construction management, where we do financial management, we do commercial management, operational management, and we offer new products to the market. In any case, we would like to increase the business this year. In terms of EBIT, we can't say just right now that we can increase it in the moment, due to the fact that we maybe will invest in some companies. For us, you see the EBITDA is at 29%, and this is an amount we think is an amount which we can increase. Just right now, we are there where we are. You have always to see integration, restructure costs, if you look to the EBIT, is always an issue.
Yeah. Fully understood. Do you have an idea in the medium term, say in three years?
Our target is between 15% and 20% for the EBIT. Maybe if we do the right investments, we can increase this as well.
All right. That helps me a lot. Thank you very much for taking my questions.
Thank you.
Thank you. The next question we have is from the line of Holger Steffen from SMC Research. Please go ahead.
Good morning. Thank you for your detailed explanation so far. I have some additional questions.
Yes.
As far as you have reported, you have changed your strategy and will expand your portfolio to 500 megawatts until 2023. What's your projected budget for these investments, and what are the plans for funding?
Let's take an example. Just right now, if we think about 400 megawatts, and you see an investment of roundabout invest cost of EUR 560 million-EUR 720 million, you have a split of 20% equity to 80% usual debt cost. We have then a split of 20%-80% of, if you look to the equity, we have then an equity need of EUR 112 million-EUR 144 million. This is the calculation, so this gives you a rough idea. That means it might happen that we look to additional financing, but we don't need anything just right now and this year.
Okay. Thank you. One question about the former pipeline sale in Great Britain. You've mentioned in your annual report that likelihood of milestone payments in Great Britain has fallen significantly. Is the most probable case now that you will get no further payments?
Yeah. In our calculations, which we have for the guidance, there is no earnings out of this portfolio sale included.
Oh, okay. Do you think in 2021, that this would be the last year to get some payments?
To be honest, in our budget, we don't include it.
Okay.
Yeah. We don't include it.
Okay. One other question about the pipeline. Can you give us a project update about Chilocco in the USA?
Yeah.
There were plans to sell it last year. I think you must sell it this year. Is this still possible?
Yeah. We went through several stages with the Chilocco project, like the United States market. We have very low costs of energy there due to fracking, and so we had to restructure the Chilocco project with more efficient machines. That we needed some time for. Just right now, we are again in the sale process. We have some interesting negotiations.
Okay, that's fine. In your annual report, you've mentioned too that the seller of the projects in Poland has to fulfill conditions to finalize the transaction. You didn't add two projects, which were already successful in the December tender to your pipeline.
What's the actual situation regarding the fulfillment of the conditions?
These projects, after one year working very hard on acquiring projects, we could acquire them slightly in front of the tender in Poland. It was one week in front of that. We made contracts, and for these contracts, we had to fulfill some conditions. These conditions are now conditions which we are responsible for to fulfill. Therefore, we have direct access to these projects. The first of the project with 19 megawatts, we would like to construct and start construction this year. The next two, we plan the construction in 2021.
You have secured these two additional projects?
Yes. We have secured them. We have to finalize some things which are mainly formal things, yeah.
Okay. Good. In your outlook, you have expected a positive EBT between EUR 50 million and EUR 60 million for PNE AG in this year. Maybe you could give us a short explanation about this topic.
For PNE AG, this year about the EBT?
EBT.
Yeah. This is related to the internal situation. I don't have all numbers of the PNE AG now in place. Maybe we come back to this on a different call.
Okay. My last question, we see a high tax quota in 2019. Are the swap costs responsible for this quota?
The tax issue is, let me see. Where were tax issue. Sometimes you prepare yourselves for the questions, and I had prepared myself for this question, which I don't know.
Okay. No problem.
I have to find it.
Okay. Maybe we can discuss it later. No problem.
Yeah.
Thank you for answering my questions.
Thank you. I come back to you.
Thank you. The next question we have is from the land line, sorry, of Jan Bauer from Warburg Research. Please go ahead.
Good morning, and thank you for taking my question. I got a question on the guidance. Can you give us a split between the EBITDA contribution from power generation and from the project business?
Yeah. Power generation, we are now at an amount of EUR 19.4 million, and depending on that, what we could build this year, we going to have an increase. Just right now, as I mentioned before, it's difficult to say when we are ready with the project due to the shifts we see in delivery and due to the COVID crisis.
We can only say that we have this time a very windy January, February, and March. Therefore I think that the power generation will exceed the number we have had in 2019, maybe by EUR 2 million-EUR 3 million, maybe more. It's my estimation. Yeah. Depending on that, when we can put the new wind farms in operation, then we have an additional increase. From the EBITDA number, I would assume it's above EUR 20 million, EUR 21 million, EUR 22 million in any case.
Okay. Thank you. Your portfolio right now consists mostly of, or only of German wind farms. You have any idea whether you will probably take some of French wind farms or even the Polish wind farm into the portfolio?
Just right now. If you look to the pipeline, this is a remarkable pipeline for our business with 311 MW in phase three in Germany. You look to the numbers we have just right now in place, you see, if you would take them all, 311 plus 58, which are under construction, or shortly under construction, plus 130 MW. We have an amount in Germany where we can take them to 500 MW. Therefore, we have to see if we take French project as well on board. I can't confirm now that we stay only with German projects. Maybe we take some French projects on board as well, just right now we have enough in the pipeline.
Okay. Your current portfolio, there are a few older wind farms already running since 2002. Usually a repowering comes, may be an option after 20 years. That would be in 2022. You already have an idea what will happen to those older wind farms. Is there a repowering option? Have you the land lease contract secured and stuff like that?
Yeah, we have taken over one project last year. This project is in our Papenrode, 22.3 MW. We are working on other projects as well, which we would like to take over. Look how we can work in terms of repowering. Papenrode, we are working on to create a permit for new machines. You need time for that. In the moment, it runs well. We get good results out of it. If you look to our service business, we have 1,600 MW in operation, where we are managing around about 20 projects which had been built in former times. Therefore, there is a good basis to get additional repowering projects on board.
Okay. Thank you. Just one last question on Panama pipelines, you acquired that. Is it possible that you will already have the first project rights sale or something like that for this year?
Sorry, can you repeat it? I had some disturbances in the call.
Yeah, no problem. Your Panama pipeline, you acquired it
Yeah
during last year.
Yeah
Do you think it's an option that you already might have on sale on this pipeline for this year, like project right sale or something like that?
We are working just right now. We have the main land leases in place. We working on PPA, and depending on this PPA, we would like to sell immediately after we have the PPA in place and the permit on board. We are working on this to get this done this year. We will see. It depends on the PPA.
Yeah. I think also on coronavirus.
Yes.
Just one last question. When you are now entering the power generation business in a larger size, what do you think you can reach on the refinancing conditions? Currently your bond yields at 4%. I guess you might set up a new one, as soon as you can get out of the old one. What's your feeling for interest rates also on project financing? Is it more towards 2%, 3%?
Yeah. Just right now we have good conditions in the market, but it should be in any way below 4%. Yeah. The rest depends on the condition of that what you want to take in terms of risks, of amount, yeah. We are looking very closely to the conditions in the moment.
Okay. Thank you very much.
Thank you.
Thank you. The next question we have is from Laura Lopez from Baader Bank. Please go ahead.
Hi, a very good morning from my side. I have also a couple of questions. Maybe adding to the one at the beginning regarding the Bundesnetzagentur. I don't know if this is going to be now the common procedure that we're not going to be able to see who was successful in the auction round. Maybe coming into that, will you inform us, going forward, for the next auctions, if PNE will be awarded with some projects?
Yeah. Yeah, sure. We can do this. Yeah. Just right now, it was not, because being in front of a construction. If you have a financial close and you start construction, then we usually come up with some news on that. We didn't do it before because of a tender. Due to this special situation, we will do it in future.
Okay, great. Maybe this one is regarding, so following also some raw materials needed to construct wind blades, there are some tightness in some raw materials. I just wanted to know, does all of the pressure go into the wind turbine manufacturers, or do you also experience some pricing pressure from your supplier as well, because of that?
No, just right now we see no pricing pressure. I think the question is more and more, which projects can be finalized and when, and how secure is that? I think this becomes more and more worthwhile for the manufacturers and for the EPC providers. Therefore, because of having always very well-prepared projects, I think this is a good situation for us. We are working very closely with wind turbine manufacturers, and in these times, we have an open discussion all the time, what we can do to improve projects or to help delivery lines. Just right now, we don't see a big impact on blades or something like this, or a big delay, but we don't know what may happen if we have a longer situation like that.
Mm-hmm. Okay. Very good. Maybe regarding the big drop in oil prices now, also gas prices, electricity prices.
You also mentioned your project in the U.S., but now the situation has again changed because prices have dropped massively.
There's a lot of different views, and I know that we don't know what is going to happen. Let's say if those prices stay rather low.
for some time, Don't you think that I don't think that in Germany, that will put a lot of pressure in electricity prices, but internationally, that could put also some pressure in energy costs, As a consequence, also in auction systems or internationally, that prices also in the wind industry will be under pressure. How do you see that developing?
Yeah. In Germany and France, we have tenders and tariffs, and this is a very clear system where you have 20 years tariffs. In Poland as well, in Sweden, U.S., and other countries, you have more of the PPA structure, and yeah, there is a pressure on the energy pricing. If you see it in the mid or long run, I think it's driven by low oil prices and low fracking gas prices. I don't think that it will be on the long run on that level. Secondly, there is a big need for green energy, for clean energy. There is a willingness in the countries, and even if it's not on the first page of the agenda just right now, I think this will come back very soon. Therefore, we see it with the measurement of CO2 prices and other measurements.
I think there will come up some measurements around this.
Okay. Thank you. Then maybe, another one on solar projects. Yes, first time we saw your pipeline. The majority are in Romania. Can you maybe walk us a little bit, how does the system work there for solar projects? Is it also with tenders and/or is also more PPA-related kind of projects that you will build?
Yeah. The situation in Romania is like following. They need energy. They have increasing needs. They have a yearly rate of 6% increase in economics. On the other side, the energy pricing is around about between EUR 0.06 and EUR 0.07 per kilowatt-hour, which is very high. We got a new law beginning of the year, which now gives the possibility to sell energy due to a PPA. This is a driver for investment there in wind and in PV.
Mm-hmm. Very good. Maybe just two short ones on the new strategy. Now let's say you're going to have some more direct peers to be compared to, as you grow your own electricity generation pipeline.
These companies normally have a good dividend policy, let's say.
A good dividend cash out, have you already think what you will have as a dividend policy going forward? How important this will be? I know right now you're just in the expansion phase, so it's starting and you need the cash, but maybe that could be an important question also coming from investors.
Yeah, sure. We did it for the market. In our strategy in 2017, we said we have to get the volatility out of our predictions. Yes, we have to rethink our dividend policy in the moment when we are there, that we have a special amount and this is a big driver for our business. As you mentioned, just right now, we are in a situation of extension, and this means, we have to invest. We thought a long time about, discussed about to give a dividend. This for last year, what we would like to suggest, we came up with this dividend. In the moment, we don't want to, again, we are in extension phase.
Perfect. I think that was it from my side. Thank you very much again for the time.
Thank you.
Thank you. As a reminder, ladies and gentlemen, if you wish to ask a question, please press zero then one on your telephone keypad. There will be a short pause to see if we have any final questions in the queue.