Ladies and gentlemen, welcome to the conference call of TME AG Presenting the Full Year Report 2018. The report will be presented by CEO, Markus Lasser. At our customers' request, this conference will be recorded. As a reminder, all participants will be in a listen only mode. After the presentation, there will be an opportunity to ask questions.
May I now hand you over to Markus Lesser, who will lead you through this conference. Please go ahead, sir.
Welcome from my side as well. Giving a short overview about the financial year 2018. We did make progress in the operative project development business. We developed the wind farm portfolio. We went forward with scale up and with services so that we took all parts out of our scale up strategy and delivered on these parts.
Starting with the operative project development, we could complete, sell or start the construction of 235.7 Megawatts of projects, which is nearly in the same amount as last year. And an average number of EUR 1.4 to a range of EUR 1,400,000 to EUR 1,800,000, So we initiated an investment volume or financed it of €330,000,000 to €424,000,000 It's the same amount roundabout as in 2017, which is what is remarkable is that we could increase our megawatts on international projects in France, Poland or Italy with 158 Megawatts 152.1 Megawatts and still had under construction at the year end 93.2 Megawatts of projects in especially Germany and France. Being very good in the market shows and very competitive shows that we won tenders of about 222 Megawatts in Germany and Poland, and we could increase our total pipeline by 100 and 42 megawatts to a total amount of 4.8 gigawatts. Especially remarkable is that we are could increase our Phase III where we have our projects in the permitting process from to a level of 1.1 gigawatt roundabout, which is an increase of 12 to 38 megawatts. We could see it's not this is the onshore business.
And then offshore business, we could get milestone payments of approximately EUR 8,000,000, Borkum, Rivkum and Godawans 3. If we look to the wind farm portfolio, we could make the progress as scheduled with the project Gerdau Repowering, which was completed and the Wind Farm Schlenze, which is under construction at that time. So in this operative way, we are fully on track. Looking to our program related to scale up, we as you may remember, we started to prepare this whole program with the strategy extension. And to prepare the strategy, we had at first to refinance ourselves, which we made in the last year.
We could pay the or paid the corporate bonds back and could get a €50,000,000 corporate bond at an attractive compound of around of 4%. This means this was the basis to take so that we could take over the WPN shares. And then we defined new projects products, new products. And now we are in a situation with the WK and we changed it from AG to a GmbH form that we now changed the organization and made it very clear and straightforward so that we could so this is the new oral issue framework where we want to increase our productivity. Just right now, we finalized the procedures and the tools to implant this new form.
Additionally, we could strengthen our service business with new products and acquisition of MAB Safety Services, which is a company who supports ropes and detects ropes off elevators. This leads to financial numbers. If you look on the next page, the impairment of offshore and rental burdens, otherwise, we would have had a strong operating performance. So the EBITDA is now at EUR 16,500,000 and the EBIT at €7,800,000 We adjusted them. If you wouldn't have taken into consideration that the earnings are impacted by the impairment of the onshore inventories by €10,800,000 we would have had an EBITDA of 27.2 and EBIT of SEK 18,500,000, which would have exceeded the end of our guidance.
So therefore, we have been hit by this impairment. I will talk about later to this matter a little bit more in detail. Remarkable is that the because of the wind farm portfolio extension, we of the wind farm portfolio 2020, we could earnings accrue by an amount of €8,700,000 in the fiscal year 2018, which now leads to around about €21,000,000 in total earnings accrued. We have still a very good and strong financial basis. We have a gross cash position at around EUR 129,000,000.
The equity ratio is very solid still at 48%. The equity of EUR 260,000,000 correspondents to a book value of EUR 2.83 EUR 2.83 per share. This is remarkable. And this is a little bit lower than the last year. It is related to the dividends and share buyback program and the purchase of WKN shares.
So therefore, it's everything related to the strategy and had been planned. We would like to propose to the AGM a dividend of €0.04 per share. And this is a combination of this usual established dividend strategy. And we see a positive outlook for this fiscal year. Our guidance is for the EBIT €1,000,000 to €20,000,000 and at an EBITDA of €25,000,000 to €30,000,000 To a little bit more in detail, we had to pay some despite in some delays in the permitting processes related to special changes in regulatory changes in Germany, which where we had been hit with.
But on the other side, we could see that in international markets, we had a strong momentum, especially in France, where we finalized the wind farm and 3 wind farm projects, which we sold to Querro European of the last year with 90.2 megawatts, which is under construction. With the German project, Gellos repowering project, it's one repowering project. Every year, we do one repowering project. It's still the basis for us is the service where we do the management of around 15 100 megawatts. And every year, we can take 1 power rig out of it.
In this time, it was a 20 1.6 megawatt project. In Sweden, we completed the project Laksavkogen. And in Poland, we succeeded in a tender with 2 projects of 174 megawatts, which is 17 percent of a 1,000 megawatt tender. So by Vitzel, 42 megawatts, we sold already to Wirtgen, invest in energy. If you look at offshore, yes, especially the impairment is, I think, very important.
On the other hand, we had good numbers and good earnings related to the milestone payments for the Borkum Rivcon II and Godwin III project. We have still expect up to EUR 15,000,000 for Golovin 4. But coming back to the point which hit us, and it was in the offshore segment, we had to make an impairment on 3 out of 5 projects, which are involved in the constitutional complaint. As I said before, the impairment amounts to SEK 10 800,000 but has no cash effect. So this impairment was caused by this reassessment regarding the Offshore Wind Energy Act where we have where we filed a constitutional complaint.
After the last hearing on the 2019, it was January 20, 2019, our land development plan. The 2019 land development plan provides for future expansion by 2 gigawatts and an additional area where our projects, which is a good news, where our projects Atlantis 23 are in. And this supports that the likelihood that our project in Zone 3, Atlantis 2 and 3 will be realized. And Zone 3 has not been affected by the provisions of the 2019 land development plan. That said, it has to become relatively likely that our offshore projects in Zone 4, Jauvaer, now to the Zalemu, can claim for damages, which leads to an impairment according our balancing rules.
But I have to say, irrespective of this, we still expect that the conditional complaint will be successful for all five projects. So that means we see additional EBIT coming up due to this impairment. However, as these claims for damages cannot be recognized in the inventories, this led to a noncash value adjustment of around €10,800,000 for the Stone IV project, which are now fully written down. So therefore, this is what we can say around this impairment. It's for us, it's more technical view and a way of doing a balancing.
Scale up milestones, We are in front of the plan. We are after the ramp up phase. We are now in the form that we just right now working on the first project in PV. We acquired the 1st service companies. We are working on the expansion of the offshore development.
We improved, as I said before, the financial structure. We have new products in the market, and now we offer them to the market. And we got the first good orders on that. So therefore, we are fully in plan. And for 2019, in this plant, that we developed the 1st project pipeline in the 1st new market.
And as you could see, we published it already with Panama. We fulfilled this point as well. The Wind Farm Portfolio 2020 is one another target. Already, we have the projects, Kerstet, Arsted, Gattel Repowering and Schlenze in our portfolio. Schlenze is upcoming in the coming weeks.
So 71.3 Megawatts are in operation or under construction. So the remaining projects to bring this target size to up to 200 megawatts are in our project pipeline in different project development stages. So they are fully in plan. The earnings of crude, I already mentioned it, amounted approximately €21,000,000 And remarkable is that the power generation EBITDA grows to €4,100,000 in the 4th quarter and in total in the fiscal year 2018 to €13,200,000 and opposite fiscal year 2017 with EUR 4,200,000. Looking to the income statement.
We had a very strong quarter 4 project sales. And so as I mentioned before, the ongoing Project Development business is fully in plan. Putting all points together, I mentioned before, we would have an adjustment of impairments. And if we wouldn't have done it or wouldn't have to do it or wouldn't have done it, we would have an EBITDA at EUR 27,200,000 and EBIT of EUR 80,500,000 and this is the operative strength. Now we have a sales at €91,400,000 This is a little bit lower than in the fiscal year 20 17, which is related mainly to the international business where we sell usually projects, right?
And we don't offer turnkey projects. So the wind turbines are not in the sale process. We do afterwards maybe construction management, but we want to lower the risk. Only if we get it paid in countries where we get it paid, we do turnkey. If we look to the balance sheet for the fiscal year 2018, you could see the highlights that we highlight that we have still a strong liquidity position of EUR 129,100,000.
This is the strong basis to fund the implementation of the scale up strategy and give us the space to invest in good investments in this market. Our equity is at EUR EUR 216,300,000. As I mentioned before, dividends, share buyback program, purchase of WKN shares lowered the equity. But nevertheless, we are still on a high level. Still, is the book value over and higher than the share price in the moment?
The current liabilities, non current debt is related to the new corporate bond and liabilities to bank of EUR 86,100,000 which are not really recurs and project related, especially to the 2020 portfolio. Now the outlook. The outlook, as I mentioned before, we have the positive outlook of EBITDA of €15,000,000 to €20,000,000 and EBITDA of €25,000,000 to €30,000,000 We just right now starting with the new segment reporting in the coming quarters, we will come up with that so that you can see the numbers of the services of the project development and of the energy production so that we can see and you can see the development and the productivity. We see a very promising outlook due to the fact that we have a well filled pipeline in the moment. In the market, everybody is keen on projects.
So we think we can realize high prices. In Germany and France, especially, we have 342, 349 Megawatts in Phase 3, which means they are more it's more likely that they will get a permission. And after a tender, we can bill them and sell them. We still continue to build up our wind farm portfolio, and we have ongoing sales processes in international markets, for example, Poland, Sweden, United States. We have in offshore wind power still converting the agreements with Ersted and Wattenberg.
We explore new markets. In scale up, as I mentioned before, we're the 1st market we developed within Panama. We look for further markets related to PV and wind. The first project in development is PV project started in Germany, United States and Romania. And we see a lot of space, and we see a good feedback from the customers due to the fact that we have offered additional services and consultant solutions to the market.
Thank you.
Thank you. We will now begin our question and answer session. And our first question is from the line of Tarsten Glumtal with Firstfeltein Equity Research. Please go ahead.
Good afternoon, Markus. My first question is regarding your constitutional court case. Do you have a feeling whether your damage claim could be decided on this year or next year? What do you think is more likely?
Yes. We see, first of all, that they take it very serious. And so we think it could be maybe the end of this year, beginning of next year that we get a decision. So I cannot say this year or next year, but I think in the next 12 months, I would say.
Okay. Thanks for that. Your service business has been growing through acquisitions, and I think it is now quite substantial. Wouldn't it make sense to create a separate segment reporting for your service business?
Yes, exactly. That's what we want to do. So it's for services, you will get a segment report in future as well as for the energy the power business or power or power related margins and turnover and for the project development. So these are the 3 segments where you get a future reporting due to the fact that we had to change something in our internal accounting. So we now have to change in there, and then now we can show it in the future.
But we have also to build it up in the for the past. So that's a little difficulty, but we're working on that.
All right. That is good news and highly appreciated. You mentioned in your annual report that you are the 2nd largest operational management company in Germany with 1500 Megawatt. Just by chance, in your view, who is the largest, who is the 3rd largest player in that market?
The largest is Deutsche Windtechnik. It's a part of WKN. And now the other ones are much lower in megawatts as far as far as we know, yes? So it's according our studies, they are much lower they are around 800 megawatts or 600 megawatts, 700 megawatts, something like this. So it's not clear who is the third one.
Okay. But It could be a bunch of companies. At least
you have a very strong position in Germany with your 1500 Megawatt. Regarding your project business in Germany, could you tell us how many permits on hand you currently have to join the coming tenders?
Yes. We have we just right now, I'm late stage of some projects. In total, we have let's see. We have in the next upcoming months in the tender, we would like to go for 27 megawatts in the May tender. So I think so that we have the already the permission in place for 2 projects with a total of 7 machines.
And we're starting with the next we think that we get other in the next tender in August, October, we will get another maybe slightly around 100 megawatts in Germany. Maybe it depends on some of them in a later stage. But it's around in total, it's around, let's say, 80 to 100 megawatts, we think we will get in this year. And so we will bring to the tender.
Excellent. I think that is very good news because as you well know, getting permits is the most difficult thing for the wind developers at the moment. And having so many late stage projects at on hand that shows that you should have quite a good year in Germany. I'm happy about that. And you mentioned the 149 Megawatts of Phase III project in France.
Do you have an indication how much you might start to construct or to sell project lights this year?
Yes. Just right now, we are we sold at the end of the last year three projects. So just right now, we are working on construction. We have a 19.2 megawatt project and we another 3 projects, which we sold on the next stage and which will be under construction until from now until 2021. So these are the projects for France.
In Poland, we started with Barvice. We sold this project, and now we do the construction management. And we're working on our Poland project of another 132 megawatts to go to next step and look that we can get it solved.
All right. Thanks for that. One last question. I read that you participated in an U. S.
Offshore tender process at the East Coast, but you were not successful there. Any indication for us why? I mean, of course, it is competitive process, but any special insight from your side why you were not successful there?
Yes. We don't want to do stupid things. If somebody offers 135,000,000 euros for an area where he has to deliver and to construct a project in the next 5 years, We don't know anything about that. So this was much too much over there. And I think somebody that had been done by companies like Shell and Oil Companies, and I think they wanted to put a get a grip on the ground in this area.
And so in total, three areas of $135,000,000 each had been tendered. So from my side, it's much too high, and that's why we wouldn't go in this dimension.
Okay. I think that is prudent as you are a medium sized company. You shouldn't take too much risk. And if pricing is too competitive, you won't earn money. So
And we think in the next time, this will come down again. I think this was only to show that they are there in the market.
Okay. Yes, understood. Last question from my side. You just mentioned in your call the first PV project that started, and you mentioned Germany, the U. S.
And Romania. Could you roughly tell us the megawatt figure of these projects?
Yes. We started this project of around 80 megawatts.
So in total, it's 80 megawatts?
Yes. And we increased it steadily, yes.
Okay. Excellent. That's quite a good number. All right. Thank you very much for taking my questions, Markus.
Thank you.
Ladies and gentlemen, we have no further questions. I'll hand back to our moderators for closing comments.
Okay. Thank you, and we see you at the next time.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.