Dear ladies and gentlemen, welcome to the Conference Call of PNE AG, presenting the full year report 2018. The report will be presented by CEO, Markus Lesser. At our customer's request, this conference will be recorded. As a reminder, all participants will be in listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulty hearing the conference, please press star followed by zero on your telephone for operator assistance. 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 made progress in the operative project development business. We developed the wind farm portfolio. We went forward with scale-up and with services, 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 MW of projects, which is clearly in the same amount as last year. If you take an average number of 1.4 to a range of 1.4 to EUR 1.8 million, we initiated an investment volume or financed it of EUR 330 million- EUR 424 million. It's the same amount, round about, as in 2017.
What is remarkable is that we could increase our megawatts on international projects in France, Poland, or Italy with 150 MW, 152.1 MW, and still had under construction at the year-end, 93.2 MW of projects in, especially Germany and France. Being very good in the market and very competitive shows that we won tenders of about 222 MW in Germany and Poland, and we could increase our total pipeline by 142 MW to a total amount of 4.8 GW. Especially remarkable is that we could increase our phase III, where we have our projects in the permitting process from two to a level of 1.1 GW, round about, which is an increase of 1238 MW. We could see this is the onshore business, then offshore business, we could get milestone payments of approximately EUR 8 million, Borkum Riffgrund and Gode Wind 3.
If we look to the wind farm portfolio, we could make the progress as scheduled with the project, Gedser Repowering, which was completed, and the wind farm Stenss, which is under construction at the time. In this operative way, we are fully on track. Looking to our program related to scale-up, as you may remember, we started to prepare this whole program with the strategy extension. To prepare the strategy, we had at first to refinance ourselves, which we made in the last year. Well, paid the corporate bond back, could get a EUR 50 million corporate bond at an attractive coupon of 4%. This means this was the basis that we could take over the WKN shares, then we defined new products.
Now we are in a situation with the WKN. We changed it from AG to a GmbH form. We now changed the organization and made it very clear and straightforward so that we could. This is a new organizational framework where we want to increase our productivity. Just right now, we finalized the procedures and the tools to implement 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 of elevators. This led to financial numbers. We look on the next page, the impairment of offshore and rental burdens. Otherwise, we would have had a strong operating performance. The EBITDA is now at EUR 16.5 million and the EBIT at EUR 7.8 million.
We adjusted them, if you wouldn't have taken into consideration that the earnings are impacted by the impairment of the offshore inventories by EUR 10.8 million. We would have had an EBITDA at EUR 27.2 million and EBIT of EUR 18.5 million, which would have exceeded the end of our guidance. 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 because of the wind power portfolio extension, of the wind power portfolio 2020, we earnings accrued by an amount of EUR 8.7 million in the fiscal year 2018, which now leads to around about EUR 21 million in total earnings accrued. We have still a very good and strong financial basis. We have a gross cash position at around EUR 129 million. The equity ratio is very solid, still at 48%.
The equity of EUR 260 million corresponds to a book value of EUR 2.83 per share. This is remarkable, and it is a little bit lower than the last year. It is related to the dividends and the share buyback program and the purchase of WKN shares. Therefore, everything related to the strategy and had been planned. We would like to propose to the AGM a dividend of EUR 0.04 per share, and this is the continuation of this usual established dividend strategy. We see a positive outlook for this fiscal year. Our guidance is for the EBIT, around about EUR 15 million-EUR 20 million and at EBITDA of EUR 25 million-EUR 30 million. A little bit more in detail.
We had to face some delays in the permitting processes related to special changes in regulatory changes in Germany, which we had been hit with. 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 three wind farm projects, which we sold to Quaero European Infrastructure Fund. We still have a project which had been sold on the last quarter of the last year with 90.2 MW, which is under construction. With the German project, Gerdau 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 1,500 MW. Every year we can take one project out of it. In this time, it was a 21.6 MW project.
In Sweden, we completed the project, Laxåskogen, and in Poland, we succeeded in a tender with two projects of 174 MW, which is 17% of a 1,000 MW tender. By which the 242 MW we sold already to Wirtgen Invest Energy GmbH. If you see offshore, 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 Riffgrund 2 and Gode Wind 3 project. We have still to expect up to EUR 15 million for Gode Wind 4. Coming back to the point which hit us, and it was in the offshore segment, we had to make an impairment on three out of five projects which are involved in a constitutional complaint. As I said before, the impairment amounts to EUR 10.8 million, but has no cash effect.
This impairment was caused by this reassessment regarding the Offshore Wind Energy Act, where we filed a constitutional complaint. After the last hearing in 2019, it was January 20th, 2019, on land development plan. The 2019 land development plan provides for a future expansion by 2 GW and an additional area where our project, which is a good news, where our project, Atlantis 2 and 3 are in. This supports the likelihood that our project in Zone 3, Atlantis 2 and 3, will be realized. Zone 4 has not been affected by the provisions of the 2019 land development plan. It has to become relatively likely that our offshore projects in Zone 4, Jules Verne and now with Nemo, can claim for damages, which leads to an impairment according our balancing rules.
I have to say, irrespective of this, we still expect that the conditional complaint will be successful for all five projects. That means we see additional EBIT coming up due to this impairment. As these claims for damages cannot be recognized in the inventories, this led to a non-cash value adjustment of around EUR 10.8 million for the Zone 4 projects, which are now fully written down. Therefore, this is what we can say around this impairment. For us, it's more a technical view and a way of doing a careful 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 are working on the first project in PV. We acquired the first service companies. We are working on the expansion of the offshore development.
We improved, as I said before, the financial structure, where we have new products in the market, and now we offer them to the market, and we get the first good orders from that. Therefore, we are fully in plan. For 2019, it's planned that we develop the first project pipeline in the first new market. As you could see, we published it already with Panama, we fulfilled this point as well. The wind farm portfolio 2020 is another target. Already, we have the projects, Kuhstedt, Arzdett, Gerdau Repowering, and Schlenzer in our portfolio. Schlenzer is upcoming in the coming weeks. 71.3 MW are in operation or under construction. The remaining projects to bring this target size to up to 200 MW are in our project pipeline in different project development stages, so they are fully in plan.
The earnings accrued, I already mentioned it, amount to approximately EUR 21 million. Remarkable is that the power generation EBITDA grows to EUR 4.1 million in the fourth quarter, and in total in FY 2018 to EUR 13.2 million, and opposite to FY 2017 with EUR 4.2 million. Looking to the income statement, we had a very strong quarter four project sales. 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 for impairment, 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 27.2 million and an EBIT of EUR 18.5 million, and this is the operative strength. We have a sale that's EUR 91.4 million.
This is a little bit lower than in FY 2017, which is related mainly to the international business where we sell usually projects, right? We don't offer turnkey projects. 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 FY 2018, you could see the highlight that we have still a strong liquidity position of EUR 129.1 million. This is the strong basis to fund the implementation of the scale-up strategy and gives us the space to invest in good investments in this market. Our equity is at EUR 216.3 million. As I mentioned before, dividends, share buyback program, purchase of WKN shares have lowered the equity.
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 liability is non-current debt, it's related to the new corporate bond and liabilities to bank of EUR 86.1 million, which are not recurring and project related, especially to the 2020 portfolio. The outlook. The outlook, as I mentioned before, we have the positive outlook of an EBIT to EUR 15 million-EUR 20 million and EBITDA of EUR 25 million-EUR 30 million. 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 at the moment. You know in the market, everybody's keen on projects, we think we can realize high prices. In Germany and France especially, we have 349 MW in phase 3, which means it's more likely that they will get permission, and after tender, we can build them and sell them. We still continue to build up our wind farm portfolio, we have ongoing sales processes in international markets, for example, Poland, Sweden, U.S. We have offshore wind power still converted to agreements with Ørsted and Vattenfall. We explore new markets. In scale-up, as I mentioned before, the first market we developed in Panama, we look for further markets related to PV and wind. The first project in development, a PV project, started in Germany, U.S., and Romania.
We see a lot of space, and we see 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. If you have a question for our speakers, please dial zero one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find the question is answered before it's your turn to speak, you can dial zero two to cancel your question. If you are on the speaker equipment today, please be seated before making your selection. One moment please for the first question. Our first question is from the line of Karsten Blumenthal with First Berlin 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?
Yeah, we see, first of all, that they take it very serious. We think it could be maybe the end of this year, beginning of next year, that we get a decision. 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?
Yeah, exactly. That's what we want to do. For services, you will get a segment report in future, as well as for the energy, the power business, or power-related margins and turnover, and for the project development. These are the three segments where you get a future reporting due to the fact that we had to change something in our internal accounting. We now have the change in there, now we can show it in the future. We have also to build it up for the past. That's a little difficulty, we work on it.
All right. That is good news and highly appreciated. You mentioned in your annual report that you are the second-largest operational management company in Germany with 1,500 MW. Just by chance, in your view, who's the largest, who's the third-largest player in that market?
Yeah. The largest is Deutsche Windtechnik. It's a part of WKN. Now, the other ones are much lower in megawatts as far as what we know. According our studies, they are much lower. They are around 800 MW or 600 MW, 700 MW, something like this. It's not clear who is the third one.
Okay.
It could be a bunch of companies.
At least you have a very strong position in Germany with your 1,500 MW.
Yeah.
Regarding your project business in Germany, could you tell us how many permits on hand you currently have to join the coming tenders?
We just right now are in later stage of some projects. In total, we have, let's see. We have in the next upcoming month, in the tender, we would like to go for 27 MW in the May tender. I think there we have already the permission in place for two projects with a total of seven machines. We are starting with the next, we think that we get in the next tender in August, October, we will get another maybe slightly around 100 MW in Germany. It depends on, some of them are in a later stage, but in total it is around, let's say 80 MW- 100 MW, we think we will get in this year. 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. Having so many late-stage projects on hand, that shows that you should have quite a good year in Germany. I am happy about that. You mentioned the 149 megawatt of phase III project in France. Do you have an indication how much you might start to construct or to sell project rights this year?
Just right now, we sold at end of the last year, three projects. Just right now we are working on a construction. We have a 19.2 MW project. Another three projects which we sold are on the next page, which will be under construction from now until 2021. These are the projects for France. In Poland, we started with Barwice. We sold this project. Now we do the construction management. We are working on our Poland project of another 132 MW to go the next step and look that we can get it sold.
All right. Thanks for that. One last question. I read that you participated in an U.S. offshore tender process at the East Coast.
Yeah
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?
Yeah. We don't want to do stupid things. If somebody offers EUR 135 million for an area where we have to deliver and to construct a project in the next five years, we don't know anything about that. This was much over. I think somebody that had been done by companies like Shell and oil companies, and I think they wanted to get a grip on the ground in this area. In total, three areas of $135 million each had been tendered. 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.
We think in the next time, it will come down again. I think this was only to show that they are in the market.
Okay. Yeah. Understood. Last question from my side. You just mentioned in your call the first PV project that started. You mentioned Germany, the U.S., and Romania. Could you roughly tell us the megawatt figure of these projects?
Yeah, we started this project of around 80 MW.
In total, it's 80 MW?
Yeah, we increase it steadily. Yeah.
Okay. Wow, excellent. That's quite a good number. All right. I thank you very much for taking my questions, Markus.
Thank you.
As a reminder, if you would like to ask a question, please press zero one on your telephone keypad now. Ladies and gentlemen, we have no further questions. I hand back to our moderator for closing comments.
Okay, thank you. We see you at the next time.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.