Good day, and welcome to the Q2 Report 2017 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Markus Lesser. Please go ahead.
Good morning. I would like to give you an overview about the 2017 first half year highlights. When we see where we started, we can now say that we are with 94 megawatts, have a bigger amount of projects under construction in Germany and France. We have completed as scheduled our project, Altenburg. So we can say our project implementation is fully on track.
We had access in the Offshore business, One big project, Atlantis 1, was sold to Wackenfell, and Go to Win 3 was 1 of 4 projects, which was successful in the first tender for the offshore wind energy in Germany. What we could see in that time where the general meeting and this annual general meeting showed that we could distribute a dividend of EUR 0.2 to €0.12 per share. And we had could see that we had elected 3 new members for the advisory board. We see high development activities, which are reflected in the financial figures as well as we build up our portfolio. We have our total output at €50,000,000 and an EBIT at minus €5,000,000 which is absolutely according our plan.
We see that the group EBIT in the range of 0.0 up to EUR 50,000,000 group EBIT is expected, and we still confirm our guidance. The positive earnings drivers we see in H2, we will show afterwards. You see on the next page high development activities in Page 1. As I mentioned before, 94 megawatts under construction in Germany and France. This shows that the international business is really growing, especially in France.
We have a special momentum with 41 Megawatts under construction. 32 Megawatts is related to a framework deal with John Lane. And on the other side, we see the good progress in Germany, where we have 53 megawatt under construction, which will be completed in 2017. 43 megawatts of this new wind farm portfolio we started this year will be a part of the new wind farm portfolio. The project rights of 74 megawatts were sold to project partners, 8 megawatts were purchased from project partners.
This shows that we have additional businesses with our project rights. Very successful. We see now that the U. S. Wind farm Vivaldi was sold.
This is a project with 80 megawatts with a potential extension up to 300 megawatts. These projects, right, had been sold to Pattern Energy in July. It is not in these numbers just right now. The start of construction is planned for 2017 and the commissioning in 2018. Still, we're working on ongoing tenders and separation for South Africa, Poland, Turkey, Italy and Germany.
And as well, we have still a strong portfolio, which we are working on of 4,850 Megawatts. Jurg, on the next slide to the offshore projects, we see that Atlantis 1 was sold to Wattenberg. We got a lower double digit million payment in 2017, and we expect further payments in the 2018. If Wattenfall is attending the next tender next year, what we think what they will do. 1 of 4 projects, Broadwind 3, was successful in the first tender.
This is a clear improvement of the high quality of the P and E wind project. So we have to see that we still active as server provider for projects which are sold. We are consultants of DONG and Wattenfall and still following up the project. We expect further milestones for Orkum Rifcon 2 and Gotohin 3 and 4, up to EUR 24,000,000 One point we discussed and showed the last time was a constitutional complaint about the project in zones 3 to 6, which will which had been brought to the central model by the new wind circuits. We see these local legal opinions of the concluded part of Winseigesets are unconstitutional, and we filed this complaint end of July.
Next slide, we see the ANCA income statement. The income statement shows that the total output is around €50,000,000 versus €61,100,000 last year. The decrease mainly driven by lower sales from electricity generations, which is a delta of €8,500,000 due to the sale of the wind pump portfolio in 2016. Generally, all financial data shows the activity in the build out of the new wind farm portfolio. The EBIT is at minus €5,000,000 but we can see that the fixed cost base clearly reduced.
And we see additionally that the earnings generated from wind pump portfolio eliminated within the scope of consolidation amount to €4,500,000 in H1 of 20 17. 17. You also could see that you can see that the net income improved year on year basis. If you look to the next oil property, plant and equipment at around €38,100,000 And we could see that the you can see that the inventory is now at €106,300,000 We have a still very strong liquidity position to fund our future developments. And we can see that we have around 122 1,000,000 in cash and equivalents.
We have a working capital line of EUR 10,000,000 and additionally, our project financing available is around EUR 42,000,000. With an equity ratio of 53%, we have still a strong balance sheet. That in this half year, as mentioned already, we distributed in June our dividend of €0.21 The current liability is €161,300,000 which are mainly related to the corporate bond, which is stable in May 2018. Net debt is at €11,000,000 which is mainly driven because of the due to the fact that we make the investment. If you look to the outlook summary, We are building up our wind farm portfolio.
The first 40 3 megawatts are under construction. We have 41 megawatts under construction in France. We continue to grow our international business. We just right now opened our office in Hamburg, where we have a team who support smart development in new markets. We are working in offshore wind power still on some projects.
We're looking for new markets. Atlantis Ains expected to participate in the next tenure, and we're expecting milestone payments. We see ourselves well prepared for upcoming challenges. Our balance sheet has a good has a strong view, and we have a high cash position. We have a successful experience in tenders in the past.
In UK, for example, we had been successful 2 years ago. We focus on high quality projects, which is important because also important for the manufacturers, where they give their best costs in tender procedures. And we continuously optimize our cost and the LCOE in our phases of the value chain. Just right now, we're working on more than 100 points to reduce the cost of projects together with manufacturers. We see ourselves on track to achieve the positive EBIT for 2017, especially earn out SUS associated with the sale of the 142.5 Megawatt Portfolio in 2016, expected to come up in 2003.
We see there lower double digit million sum due to the increase of the enterprise value because of being refinanced. We see additional out payments expected. We still see our guidance and confirm our guidance of an EBIT between €150,000,000 Thank you very much. So if there are any questions, go ahead with the Q and A session.
We will now take our first question from Karsten von Blumdal from First Berlin Equity Research. Please go ahead.
Yes. Karsten from Loomtahl from First Berlin. Good morning, Markus. I'm happy to hear that you will receive a low double digit million payment for the 2016 portfolio. I did not exactly understand why you get this bonus payment.
And I would like to know whether it goes completely into EBIT or do we have to deduct any costs with it? That would be my first question.
Yes. We had a contractual agreement that if there are positive effects because of refinancing, we get a share of that. And due to the increase of the enterprise value, we could get this additional payment. We see that a lower double digit million sum and this is purely EBIT, yes.
Perfect. That is great. Regarding your new portfolio, you say 43 megawatts of the projects under current construction will go to the new portfolio. So may I guess that the Kjerstedt, Alvestedt project, which is a 43 megawatt project will be completely in that new portfolio?
Yes, you're exactly right.
Okay. Seems to be a very good and great project. So I think that is good for your long term position in generating power. You also mentioned that regarding your portfolio, you have an EBT generated, but due to the group elimination not shown of €4,500,000 that is quite high a figure compared to last year with the old portfolio where you had only €2,500,000. So is that project in Kirste if so far advanced that you already would have booked such a high EBT of €4,500,000 for it?
Or could you elaborate on that?
So, yes, you can see that the projects in the portfolio in the past, in the beginning had a higher eliminated EBIT. So in the last round, shortly before they are commissioned or they have a lower rate. So that means in the beginning, you have a higher rate due to the fact that we have project development contracts, which we can where we can get the payment.
Understood. Okay. Perfect. Very good. Question regarding regulation in North and Westphalia.
We have a new government and they would like to introduce new distance rules, which is certainly detrimental for wind power. Do you have projects in North Westphalia, which are affected? And how do you view this development?
Yes. We see it as a not positive development. And nevertheless, we have no projects which are affected because we mainly concentrated us on Hessen and other projects and some projects in the forest where we have these distances. And so therefore, we are not affected in the moment.
All right. Good to hear. You did not take part in the second German tender round. Do you prepare to take part in the 3rd round in November? And could you roughly give us a guess with how many megawatts?
We're just right, think about what we do in the next step. We expect lower tariffs. And in the next year, in the first round, we expect a little bit higher tariffs. So therefore, we are just right now in the calculation, and we're waiting for some permissions. So whenever when we see that these permissions are there, we can take them on board for the next tender.
But we are not sure. It's always a calculation issue.
We will now take our next question from Holger Stifel from FMC Research. Please go ahead.
Good morning. Holger Stifel speaking. I have some additional questions to general business development. Maybe my first question to Great Britain. Do you see any improvements in the UK project development?
And when do you expect your first milestone payments from Brookfield at the moment?
Yeah. Good morning, first of all. Yes, we see improvement in that what Brookfield is doing. So we just a couple of weeks ago, we could see that the next project get a permission got a permission that was Labrex. So we see that they are working on this project.
And for us, in our schedule, we see payments not this year and not next year, but the year after.
Okay. Thank you. Maybe an additional question to Atlantis 1. You've mentioned that you want to participate in the tender in next year. In this year, projects with mostly with no or with a 0 bit were awarded.
Do you expect to participate with Atlantis with a little bit in the next year? Or is it not possible?
Yes. First of all, it's not anymore our project. So we sold it to Wattenfall because we are pretty sure that Wattenfall is one of the big players in the market in the offshore business and that they have their strategy to be successful in the next tender. That's what we think. I think for everybody, it was a surprise what happened this year tender, but the next year tender, everybody will be clear, focused.
So in this respect, we expect that Wattenfall will join the tender, and I think they will do something so that they are successful. But even to make sure, to be honest, but even if they are not successful, we have a possibility that in further developments, we can get an additional milestone payment or earn out, I have to say, which is reflect the increasing value of the project. Due to the fact that the German law afterwards in the given advantage to the offshore projects, even if they are not have been not successful in the business. So in any case, we're expecting the payments. But we are strongly strong believers in that button fire is successful in the next in the tenant.
Okay. Let us switch to Turkey. In your report, you have mentioned an intensive competition in the first local auctions. How do you assess your chances to realize your huge pipeline?
Yes, we are in discussion with the manufacturers. There is a big tender, which had been won by Siemens, for example. Even before this tender, we had been in very deep discussions what we can do with several manufacturers in this tender and in other tenders. So we are we see a lot of possibilities to be successful. It's always a matter of quality of projects, which we have.
And secondly, the pricing of the machines. And there we see that we have competitive projects. We can see that we think we get competitive pricing.
Okay. When do you expect that you can realize the first project
in Turkey? Yes, we will see what the next what the tender now will bring us in the negotiations with the manufacturers. And then I have a better view. I think it's again, it's nothing for 2017. It's something for the tender after.
And so 2018, that's the next step where we will reflect on.
Okay. Do you see any political impact to the market?
For the Turkish market? Yes. Yes. We see the willingness to improve the wind power business is very, very strong. So just right now, we're talking about 4,000 megawatts in the 3,000 megawatts for 1 tender and the next tender 4,000 megawatts.
So 4,000 megawatts, they see that they have a big need of energy. And so therefore, the willingness is there very high. And therefore, we think it's still a market.
Okay. Okay. Then I may come to the U. S. Market.
You have a big success with the Montana project, which you can which you have sold to patent. You have mentioned the option to enlarge the project to, if I understand it correct, 300 megawatt. What's the probable timetable for the realization of this option?
This is an option we can see in 2019. We expect this. But just right now, we haven't calculated any plans. It's an option, it's like usual and possibility to opportunity to get it.
Okay. You still work on the Chilocco project. And did you made any progress to sign a PPA?
Yes. We are in the Chilocco project, we are now far advanced. We have now everything together to go ahead with the next step where we got some permissions. You need several permissions in this respect. And in this moment, we are we're having a PPA negotiation in the final negotiation.
From our point of view, we are on track. And so the next step is that we're going ahead in negotiations with an investor.
Okay. So I'm looking for possible projects, which could be sold in 2017 in the last few months of this year. So the Shinoco project could be a candidate for to sell in this year?
Yes.
Okay. You prepared several projects for your own portfolio. So what could I expect? What do you want to sell direct in Germany and France?
Yes. Look, we have projects under construction And one project, Longueep, is a project which is prepared to be sold, which is
a very
competitive project. And we see further projects, which are in France coming up. In this moment, I think together with the situation that we get additional financial payments, bonus payments, earn out On the project portfolio refinancing, we think there is a lot we have to expect until the year
end. Okay. My last question to your financing. In 2018, you plan to repay your bond. In addition, you execute huge investments in your portfolio.
What are the plans for the final the further plans for the financing of the portfolio buildup? Maybe do you want to place a new bond in the next year?
So we are in deep negotiations around it. I can say only the target is that we lower our interest rates by and cut them by half. That's our target. And how we handle it, we will come up in the next upcoming weeks, and we'll give you there new overview where we are standing.
Okay, perfect. Thank you very much for answering my questions.
We will now take our next question from Arash Roshan Zamir from Warburg Research. Please go ahead.
Yes, good morning. Thanks for taking my question. I really only have one question and that's with respect to your guidance. I'd like to understand your thinking because obviously you have confirmed your guidance this morning. But at the same time you have created some very positive news flow with respect to the successful sale of the Vivaldi project in the U.
S. And also with respect to the expected one off payment in Q3 from the successful sale of the wind farm portfolio last year. So there seems to be some positive profits coming up in Q3. However, you haven't barely changed your guidance in terms of narrowing, for instance, the guidance range to the upper end or something like that. So I'd like to understand really is this because of a lack of confidence with respect to what you're going to sell in the second half of this year?
Or really, what is the underlying reason for that? Thank you.
Yes.
To be very clear on this, it is think we have this range. We brought it up. We confirmed the guidance. There is nothing special. There's nothing special behind it, but it is always like usual.
When we have the things in our hand, then we will come up with new information. Not before, that's what we would like to handle, how we would like it to handle, and that's all. We are very positive. As you mentioned, we see good projects coming up and good deals coming up. And therefore, we are positive.
But nevertheless, when it is in, we can come up with good news.
Okay. Maybe just a quick follow-up. In addition to the Chilocco project in the U. S, is there anything else which you have currently on the radar with respect to selling it in the course of this fiscal year?
No, not yet. Not yet. We are preparing other projects in the United States. As you can see, Vivaldi was the first one of a series, which have an advantage because of the PTC rules. These projects could get PTC advantages.
And with Chilocco, we have another project, which is on this track and has this opportunity. So therefore and we have other projects in development, which can get these advantages as well. But this is nothing what I would like to show now and it's nothing for this year.
And maybe with respect to other markets, so not the U. S, but maybe even in Germany or other European markets, are you there maybe close to the finish line with respect to selling certain projects?
There are always in several markets opportunities and interest in projects. That's usual business, as well as we have project development, where we sell project development and not ready projects. So therefore, this is the usual business. And if there is an opportunity, which is strong enough for us, then we will sell we are going to sell projects in other countries as well.
Okay. Understood. Thank you very much.
Thank you.
As there are no further questions in the queue, that will conclude today's question and answer session. I will now turn the call back to your host for any additional or closing remarks.
Thank you.
That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may