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 procedures procedure for years. As usual, our slides that I will use can be found on our Investor Relations website.
Starting with Page 3, You can see that we had a favorable year with 450.8 megawatts of wind onshore projects sold, put into operation or started construction. This is the highest amount ever P and E has developed. For us, it is driven also by scale up and internationalization. You can imagine when we started this strategy in 2017, then we talked about processes and to optimize our organization, which we did in this time. So that means all internal processes are in place.
We have all companies in 1 organization line, which now we see as one result that the efficiency has grown. With Embus teams and together with the processes, this has really in this special situation where we are working on home offices. 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 business 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 megawatts 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 19,000,000 in the EUR 19,000,000 and the EBITDA at EUR 31,600,000. This is EBIT guidance had been EUR 15,000,000 to EUR 20,000,000 EBITDA guidance EUR 25,000,000 to EUR 30,000,000.
Therefore, together with the under numbers, which I will show you afterwards, we suggested, supervisor, board and board suggested to come up with a dividend and for the AGM for €0.04 per share. If you look to the next page, Page 5. 2 weeks ago, we have announced that we will expand our own power generation portfolio and not continue the sale of our wind farm portfolio The comfortable liquidity situation and the significantly increased project volume open up new opportunities for the P and E Group. Change framework conditions and favorable financing options have supported this decision. The Management Board and Supervisory Board of P and E AG have 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 P and E Group.
This is intended to further increase sales and urgent earnings as already emphasized 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 as part of the wind farm portfolio 2020 in our in house operations, manage them ourselves and benefit from regular income from electricity generation. D and E currently operates wind farms with an installed nominal capacity of 130.1 Megawatts itself. This also includes the projects that we were earmarked for the planned portfolio.
The plans are to expand the portfolio of internally operated projects, primarily in Germany to up to 500 megawatt by the end of 2023. We see just right now, we came in the year 2018 from 76.9% waywards, and we are now have a portfolio currently at 130.1 Megawatts. The aim is also to achieve the medium term EBIT target of €38,000,000 to €44,000,000 until 2023. Just right now, the power generation total output is at €90,400,000 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. Photo Management GmbH, a member of Morgan Stanley Infrastructure Partners Group submitted a voluntary public takeover offer to P and E shareholders at the end of October 2019 and now holds roughly 40% of the shares. The circumstances of this voluntary public take offer I presented the last time. We could increase the pipeline projects to 5,003 235 Megawatts. As you see the table, we now have a column a new column, which was which is known as which is shown as sold to services.
This means sold by construction management services by P and E 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 analysts 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 ghetto repowering, Schlenzer, Kittlets, now in Walde and Wolskeldorf. So this is which was sold last year.
Project in France, Project La Pier. We sold projects in Sweden, Malabagette and Luxorskogonen, which was the last project which was completed last year. And the biggest project in Poland, Jasna, 132 Megawatts was sold to Stadberg, I mentioned, and will be finalized end of beginning of 2021. We made a construction management for Bawice, 40 2 megawatts, which is finalized now. And in Panama, we acquired 5 projects with an amount of 3 52 megawatts.
We sold a project in the United States with Berlin. Remarkable is that we have in Germany and France a total amount of 6 22 megawatts in Phase III. This is the biggest amount ever we had in this phase. Despite the delays in the the next page, the first time we can show the project pipeline PV with an amount of 100 23 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. We will look to the next page to the results. The total output has increased. The EBITDA has increased. The EBIT has increased.
So everywhere, we have a strong increase if you take the numbers of 2019, opposite to 2018. With the total output for €174,000,000 and EBITDA of €31,600,000 and an EBIT of €90,000,000 This was mainly driven by the project sales in Poland and Sweden and a bigger project in Germany called Borzeckendorf. As well, the first time we saw a big amount of the results from the power generation and additional, we see that service 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 Looking to the segments. We see that all segments increased their earnings as well and their turnover.
So if you look to the project development, the output grows to 154 point 4,000,000, which is a plus of 57%. And EBITDA grows to EUR 25,500,000,221 percent and opposite to EUR 2018. The service output grows to EUR 18,400,000 with a plus of 55%. EBITDA increases to €5,200,000 Electricity the output increases to €19,400,000 which is plus 6%. This is the EBITDA increases slightly.
This was a special situation because we have a one off effect we had a one off effect of EUR 4,200,000 last year. So if you wouldn't consider this in this amount, then you could see that we could increase the output by far. But 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. It's the title of this page, and this is as well shown in a good cash position.
We have still €111,900,000 as a cash position, which is very solid. So it's 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 investments in the portfolio, the liability to banks increased to €135,600,000 which is mainly project financing, which is nonrecourse. And you see the impact of the IFRS 16 leases with liabilities from leasing contracts right of use, we had to add €37,200,000 The current liabilities are projects under construction, and we see there that there are many projects financing as well, nonrecourse 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 and start of the buildup of the next portfolio for the next years will not be done as well. This will be all projects for our own portfolio, and 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 week 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 bureaus. We respond to the Street with a large number of measures to protect employees. As you heard already, everybody is in home office just went down.
But also to safeguard the implementation of projects as well as supplies. At the time of publication of the 2019 annual financial statements in March 2020, we assume that there may be shifts in our operating business as regards to sale of projects rights and project implementation from 2020 to 2021 and from 2021 to 2022. And that there will be no significant impact on our business in the medium to long term. The good liquidity positions gives the company sufficiently a way to be able to cope well with longer term restrictions. And we have to say, in general, I think the climatic change issue is in a 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.
And Renewable Energy will be therefore have a good future in the future as well. So what will we do in the next time and this year? Increase our own generation portfolio, as already mentioned. We see a high project activity. We have a lot of megawatts under construction, 3 11 megawatts.
We have a very good built 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 €15,000,000 to €20,000,000 and an EBIT of €5,000,000 to €10,000,000 In this number, we consider a delay of 3 months due to coronavirus, a delay in deliveries or in anything what can support construction or permissions. Ladies and gentlemen, this concludes my
The first question we have is from the line of Carsten von Blumenthal from Equity Research. Please go ahead.
Carsten from Blumenthal from First Merlin. Good morning, Markus. Greetings from Home Office 2.
I
hope 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 Bundest Netzagen Tour this morning regarding the March tender results, and they do not they do no what was the result for you there?
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 2 projects of around 14 megawatts. This time, we haven't been in the tender.
Tender. Okay. Thanks for that. When I remember rightly, you have 58 megawatts of award German projects which you can build now. Could you or 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 certain percentage we also plan to sell. This is, of course, important for us analysts because we have to know an idea we have to get an idea of the split between projects sold and projects added to their own plant portfolio.
Sure. And let me summarize it. In the moment, we have projects in France, Poland, Sweden, United States, Italy, Romania, South Africa, where we would like to where we are in a stage that we are nearly in the stage of ready to be built so that they can be sold. So and we think this amount is enough to confirm our guidance or to get our guidance. And the portfolio in 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 Megawatt this year, probably not everything? Do you have an idea how many of the projects could be completed by the end of the year?
Yes. This is especially in this moment, difficult to say. Just right now, we see that permitting procedures runs in the right direction. Everybody is working. But you see that this is not that this goes slower.
But secondly, we have to see and have to face that deliveries of the machines can be delayed. So in the moment, we can't say if we can get them done all this year. But what I can say, we are going to start construction this year of all these projects. And in this terminal, 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, but now you have roughly EUR 16,000,000 in external sales. For the coming for this year, 2020, do you have a rough idea, will the service business grow further this year?
Or due to corona, do you expect it to be stable? And in the medium term, what do you think is a normal EBIT margin for the Service business?
Yes. The numbers are numbers which have which are mixed numbers because it's numbers where we have do construction management, where we do financial management, we do commercial management, operational management. And we offer new products to the market. So in any case, we would like to increase the business this year. In terms of EBIT, and we can't say just right now that we can increase it that in the moment due to the fact that we maybe will invest in some companies.
So this is for us, you see the EBITDA is at 29%, and this is an amount we think is an amount which we can increase. But just right now, we are there where we are. And you have always to see integration, restructuring cost, if you look to the EBIT, is always an issue.
Yes. Fully understood. But do you have an idea in the medium term, say, in 3 years?
Yes. We our target is between 15% 20 percent for the EBIT. It's our target. And maybe if we do the right investments, we can increase this as well. Thank you.
Thank you. The next question we have is from the line of Holger Stefan from S&P Research. Please go ahead.
Good morning. Thank you for detailed explanation so far. I have some additional questions. So as far as you have reported, you have changed your strategy and will expand your portfolio to 500 megawatt until 2023. What's your projected budget for these investments?
And what are the plans of funding?
Yes. Let's take an example. Just right now, if we think about 400 megawatts and you see an investment of roundabout invest costs of €560,000,000 to €720,000,000 You have a split of 20% equity to 80% rule debt cost. And we have then a split of 20% to 80 percent of if you look to the equity, we have then an equity need of EUR 112,000,000 to EUR 144,000,000 144,000,000 This is the calculation, so this gives you a rough idea. So that means it might happen that we look to additional financing and but we don't need anything just right now and this year.
Okay.
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?
Yes. In our calculations, which we have for the guidance, there is no earnings out of this portfolio sale included.
Okay. And 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. Yes, EBITDA included.
Okay. One other question about the pipeline. Can you give us a project update about Shilohco in the U. S. A?
Yes. There were plans to sell it last year. I think you must sell it this year. Is it still possible?
Yes, we are we went through several stages with the Chilocca project like the United States market. We have very low costs of energy there due to fracking. And so we had to restructure the Tuchilico project with more efficient machines that we needed some time for. Just right now, we are again in the sale process with and 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. Because of this, you didn't add 2 projects, which were already successful in the December tender to your pipeline. What's the actual situation regarding the fulfillment of the conditions?
Yes. These projects after 1 year working very hard on acquiring projects, we could acquire them slightly in front of the tender in Poland. So it was 1 week in front of that. So we made contracts. And these contracts had for these contracts, we had to fulfill some conditions.
These conditions are now conditions which we are responsible for to fulfill. So therefore, we have direct access to this project. And the first of the projects with 19 megawatts, we would like to construct and start construction this year. The next 2, we plan the construction in 2021.
So you have secured these 2 additional projects?
Yes. Yes, we have secured them, but we have to finalize some things, which are mainly formal things, yes.
Good. In your outlook, you have expected a positive EBT between €50,000,000 €60,000,000 for P and E AG in this year. Maybe you could give us a short explanation about this topic?
For P and E AG, this year about the EBT. EBT. Yes. This is related to the internal situation. I don't have all numbers of the P and E agent 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 quarter?
The tax issue is let me see. We have a tax you know, sometimes you prepare yourselves for the questions, and I had prepared myself for this question. Okay.
No problem. Where we can
I have to find it?
Okay. Maybe we can discuss it later. No problem. And thank you for answering my questions.
Thank you. I'll come back to you.
Thank you. The next question we have is from the landline, 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. So can you give us like a split between the EBITDA contribution from Power Generation and from the project business?
Yes. Power generation, we are now at an amount of €19,400,000 And depending on that, what we could build can build this year, we're going to have an increase. Just rest right now, as I mentioned before, it's difficult to say when we are ready with the project due to the shift we see in delivery and due to the corona crisis. And we can only say that we have this time very windy January, February and March. So therefore, we think I think that the power generation will exceed the number we have had in 2019 maybe by €2,000,000 to €3,000,000 maybe more, it's my estimation.
And depending on that, when we could when we can put the new wind farms in operation, then we have an increase an additional increase. From the EBITDA number, I would assume it's above €20,000,000 €20 2,000,000 in any case.
Okay. Thank you. So your portfolio right now consists mostly of only of German wind farms. So 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, we have if you look to the pipeline, and this is a remarkable pipeline for our business with 311 Megawatts in Phase 3 in Germany. And you look through the numbers we have just right now in place, and you see if you would take them all, 311 plus 58, which are under construction or shortly under construction, plus 130 megawatts. So we have an amount in Germany where we can take them to 500 Megawatts. And so therefore, we have to see if we take French project as well on board. But I can't confirm now that we stay only with German projects.
Maybe we take some French projects on board as well. But just right now, we have enough in the pipeline.
Okay. So your current portfolio, there are a few older wind farms who are already running since 2 1002. So usually, a repowering comes may be an option after 20 years. That would be in 2022. So you already have like an idea what will happen to those older wind farms.
Is there a repowering option? Have you the land lease conflict secured and stuff like that?
Yes. We have taken over one project last year and this project is in our with Spartan Road, 22.3 Megawatts. And we have we are working on other projects as well, which we can take which we would like to take over and then look how can we can work in terms of repowering. Part motor, we are working on to create a permit for new machines, but you need time for that. In the moment, it runs well and we get good results out of it.
And if you look to our service business, we have 1600 megawatts in operation where we are managing around about 20 projects, which had been built in former times. So therefore, there is a good basis to get additional repowering projects on board.
Okay. Just one last question or the thing is on the pipeline, so you acquired it. And is it possible that you will already have like a first project rights sale or something like that for this year?
Sorry, can you repeat it? I had some disturbances in the call.
Yes. No problem. Your Panama pipeline, so you acquired it during last year. And do you think it's in there, it's an option that you already might have on sale on this pipeline for this year, like project site sale or something like that?
Yes. So we are working just right now. So we have the main land leases in place. We're 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.
And we think we can we are working on this to get this done this year. But we will see. It depends on the PPA. Yes. Andrew, I think also on coronavirus.
Just one last question. So when you are now refinancing conditions? So currently your bond yields at 4%. So 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%?
Yes. So just right now, we have good conditions in the market, but it should be in any way below 4%, yes? The rest depends on the condition of that what you want to take in terms of risks of amount, yes? And so we are looking very closely to the conditions in the moment.
Okay. So thank you very much. Thank you.
Thank you. The next question we have is from Lara 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 Brunsensevsangue Ageltua. 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. So maybe coming into that, will you inform us going forward for the next auctions if P and A will be awarded with some projects?
Yes. So if there is yes, sure. We can do this, yes. So just right now, it was not because being in front of a construction. So if you have a financial close and you start construction, then we can usually come up with some news on that.
But we didn't do it before because of a tender. But due to this special situation, we will do it in
future. Okay. Great. And maybe this one is regarding so following also some raw materials needed to construct wind plates. There are some tightness in some raw materials.
And this 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 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 is always this is becomes more and more worthful for the manufacturers and for the EPC providers. So therefore, I'm because of having always very well prepared projects, I think this is a good situation for us.
And 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.
Okay. Very good. And maybe regarding the big drop in oil prices now also gas prices, electricity prices. So you also mentioned your project in the U. S, but now the situation has again changed because prices have dropped massively.
And so I mean, there is a lot of different views and I know that we don't know what is going to happen, but let's say if those prices stay rather low for some time, then 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 cost and then as a consequence also in auction systems or internationally so that prices also in the wind industry will be under pressure. So how do you see that developing?
Yes. 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, United States and other countries, you have more of the PPA structure. And yes, there is a pressure on the energy pricing.
But 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. So and secondly, there is a big need for green energy, for clean energy. So 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.
And therefore, we see it with the measurement of CO2 prices and other measurements, I think that will come up some measurements around this.
Okay. Thank you. And then maybe another one on solar projects. So 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 it's also more PPA related kind of projects that you will build?
Yes. The situation in Romania is like following. They have they need energy. They have increasing needs. Have a yearly rate of 6% increase in economics.
And on the other side, the energy pricing is around about between 0 point 0 $0.06 is very high. So and we got a new law beginning of the year, which now gives the possibility to sell energy due to a PPA. And this is a driver for investment there in wind and in PV.
Very good. And maybe just 2 short ones on the new strategy. So 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. So these companies normally have like a good dividend policy, let's say, also a good dividend cash out. Have you already think what you will have as a dividend policy going forward?
Or how important this will be? I know right now you're just in the expansion phase. So starting and you need the cash, but maybe that could be an important question also coming from investors.
Yes, sure. We did it for the market. In our strategy in 2017, we said we have to get the volatility out of our predictions. And 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.
And we saw a long time about discussed about to give a dividend this for last year and what we would like to suggest. And we came up with this dividend. But in the moment, we don't want to we are again, we are in an extension phase.
Perfect. And I think that was it from my side. And thank you very much again for the time.
Thank you. Thank you.