Good morning, welcome to Aker Solutions presentation of the second quarter results for 2019. My name is Tove Røskaft, and I head up communications and investor relations at Aker Solutions. With me here today is our Chief Executive Officer, Luis Araujo, and our Chief Financial Officer, Svein Stoknes. They will go through the main developments of the quarter. We will also have some time for questions and one-on-one interviews with the press after their presentations. Please note that we have no fire drills planned for today, so in case of an alarm, the escape is through the doors behind you and to your left. Thank you. Luis, I will now hand over to you.
Thank you, Tove. Good morning, and thank you for joining us here today on this beautiful sunny day in Oslo. I'm happy to say that the second quarter of 2019 was another period of strong execution, solid financial performance, and high tendering activity. As usual, let me start with the main developments in this quarter. Major project progressed well during the first quarter. We have completed installation of the Valhall Flank West platform for Aker BP ahead of schedule and under budget. This was the first delivery from the wellhead platform alliance between ABB, Aker Solutions, Kværner, and our client, Aker BP. In May, we reached mechanical completion of the Mariner project for Equinor in the U.K. This is one of the largest hookup and commissioning projects we have ever delivered. We're very proud of it.
Moving forward, we will help our customer to reach first oil and then support ongoing operations through our U.K. Brownfield frame agreement. Within the subsea business, our yard in Egersund delivered the subsea template for Equinor Troll field. Also, we deliver umbilicals for the Wintershall Nova project from our base in Moss. We delivered the first SPS project for the subsea alliance with our alliance partners, Aker BP and Subsea 7, for the Skogul development. This was done on time and budget, and with no reported HSE incidents. After the quarter, at the end of the quarter, we continue our investment in renewables, making a further acquisition and increasing our ownership in Principle Power from 11% to 23%.
We successfully completed a new 1 billion NOK bond issue, replacing the existing bond which expires in October. Svein will take you through the more details later in his presentation. During the quarter, some important changes in the Aker Solutions executive management team were announced. Maria Peralta, who came from the position as a country manager in Brazil, became head of products globally. Eigil Boen, who was previously our head of projects, took on leadership of the Greenfield Projects. Finally, we announced that Ole Martin Grimsrud will take on the position as Chief Financial Officer from August 1st, as Svein takes the position as CFO at the Aker ASA.
I'd like to take this opportunity to publicly thank Svein Oskar Stoknes for his leadership and support during the time he spent with Aker Solutions. We delivered another period of solid financial performance. In fact, it was the fifth consecutive quarter with revenue growth. This thanks to a relentless focus on time and delivery and efficient improvements despite the challenging pricing environment we have seen in recent years. Now for the main numbers. These are the second quarter figures according to the new IFRS standards. Revenue of NOK 7.5 billion, EBITDA of NOK 623 million, an EBITDA margin of 8.3%. Excluding special items, the margin was 8.4% and earnings per share was NOK 0.56.
We also won NOK 3.8 billion in new orders and the backlog ended at a healthy NOK 29.5 billion. Afterwards, Svein will take you through the numbers in far more detail. In terms of order intake, I'm pleased to see that we are winning work from target customers and in the regions that, where we want to grow. From Aker BP, we have signed a new exclusive frame agreement to provide subsea equipment over the next five years. For PETRONAS in Malaysia, we have been awarded a frame agreement for engineering services. The frame agreement covers the full scope of engineering services, upstream, midstream, downstream, onshore and offshore. Aker Solutions is one of the only two frame agreement holders that have received the full scope.
Well, let me clarify that no volume from these frame agreements have been booked in the second quarter, and this will be included when the call-offs are made. In Subsea, we had a strong quarter for our umbilical business, winning awards that included the following. The Herschel project in the Gulf of Mexico, with another contract for our key customer, BP, umbilicals for the second phase of Chevron Gorgon project in Australia. Eni Cabaça project in Angola. At the end of the quarter, we signed a new umbilical contract for the Johan Sverdrup Phase 2 development with Equinor. Also we won a large contract with an undisclosed key customer in a new deepwater region.
Together, these contracts are worth more than NOK 1 billion and will be delivered from our two plants in Moss, Norway and in Mobile, Alabama. We also won a carbon capture and utilization contract from Twence for a waste-to-energy project in the Netherlands using our modular system named Just Catch. This is another important step in the low-carbon journey and further validation of this important technology. Once the CO2 is captured and liquified, it will be used by nearby greenhouses where it will increase the growth of plants and vegetables. We continue to see strong demand for early phase front-end work, and as I mentioned several times previously, the earlier we get involved in a field development, the greater the potential to significantly optimize the overall project development. In the first half, we won 74 front-end orders, around similar levels to last year.
I would like to remind you that last year was a record year. This is a good indication that operators are willing to develop new projects, and we see this as a clear sign of potential increase on submarine activity. As you can see on the slide, a large number of studies have turned into more detailed field projects, the next phase, putting us in an excellent position for further work in the next phases of these developments. A number of these studies are strategically very important for us, and this includes the Oseberg Phase II compression study for Equinor. A study for Equinor carrying the lessons learned from Johan Castberg into the Rosebank development in the U.K.
The BP Clair South pre-field study, with a clear focus on how digitalization and low-carbon solutions can help to develop the production facility of the future. As well as ongoing demand for front-end studies, tender activity remains high. With that in mind, I want to share some more insight to our tendering activity than we normally do. Globally, we are currently tendering around 55 billion NOK. With this high tendering activity volume and the front-end activity mentioned previously, I believe we are well-positioned for projects to be awarded in the second half of this year. As you can see on the map behind me, right, the geographical spread is good and located in areas where we have a very strong position. Okay, and now to the outlook.
Despite the competitive and volatile market, the outlook is promising. We continue to deliver strong execution and enjoy repeat orders from customers, which I have to agree is very important. Tendering and front-end activity remains high in our target markets, with current bid activity totaling about NOK 55 billion with a good balance between regions and segments. We anticipate some key projects to be awarded this year. We have strengthened focus on low-carbon activities, as you probably saw in the presentation, and have shown our firm commitment to grow our business in that area. We also see great interest in our offerings within the gas segment. An example is the increased interest in gas compression studies across all regions. All in all, I believe that Aker Solutions is well-positioned to capture opportunities in both new and existing markets.
In summary, we closed the second quarter with continued revenue growth, strong execution on projects and services, and high tendering activity, as well as a healthy order backlog. These elements are supporting stable and healthy financial performance. Thank you for listening, Svein will go through the numbers in more details.
Thank you, Luis, and good morning. As usual, I will now take you through the key financial highlights of the second quarter, our divisional performance, and run through our financial guidance before we move on to Q&A. As always, all numbers mentioned are in Norwegian kroner. Again, I would like to remind you that as of January 1, 2019, we have adopted the new IFRS 16 accounting standard related to leasing. To state the obvious, this is purely a change in accounting method of leases, and it has no cash impact. Comparative figures have not been restated, and we have included additional information related to this change of accounting principle in the half year report.
As usual, let's start with the income statement. Overall operating revenue for the second quarter was NOK 7.5 billion, up 20% year-on-year, reflecting a very high activity level in field design and increased activity in subsea on the back of work one over the last 18 months. As a result, our projects reporting segment was up 24% year-on-year. The services segment also delivered solid growth and was up 12% year-on-year, primarily driven by the production asset services sub-segment. Our reported second quarter EBITDA was NOK 623 million, and this included net NOK 6 million of special items. While the new IFRS 16 leasing standard increased our reported EBITDA by NOK 146 million.
For your reference, we have set out a table in the half year report that further specifies the special items and the effects of IFRS 16 leasing. Excluding special items, EBITDA was NOK 629 million, an increase from NOK 441 million a year earlier. This was equal to an underlying margin of 8.4% compared to 7.1% in the same period last year. Excluding the effects of IFRS 16, our underlying margins were marginally down compared to the same period last year. This should be viewed as a solid achievement, as we are currently progressing on our newly awarded work, which is won in a very competitive market, an evidence of continued strong execution and good momentum on efficiency improvement programs.
Compared to the same period last year, we also see the effects of a different revenue mix on our margins with a higher share of lower margin field design and production asset services activity. Mentioned at our Q1 earnings call, we have, in the second quarter, taken an impairment charge of our right of use assets related to IFRS 16 of NOK 216 million with no cash impact. This comes as a consequence of our continuous improvement efforts as we're looking for ways to optimize our footprint, and we have been successful in subleasing a good share of our excess office capacity. Second quarter underlying depreciation was up year-on-year at NOK 304 million. Excluding the effects of IFRS 16, the depreciation was NOK 187 million, in line with our previous guidance.
We continue to expect underlying depreciation, including the effects of IFRS 16, to be around NOK 1.2 billion per year. Our reported second quarter EBIT or operating profit decreased year-on-year to NOK 98 million from NOK 254 million. Excluding special items, EBIT was NOK 325 million, and the margin was 4.3% versus 4.1% in the previous year. Net financial items were NOK -112 million in the quarter, excluding a minor unrealized hedging loss of NOK 5 million. We continue to see our net financial items around this level per quarter going forward, excluding the effect of currency and non-qualifying hedges. Our tax charge was equivalent to a rate of 33% in the first half of the year.
Going forward, we continue to expect average P&L tax rates to be in the low to mid-30% range. We ended the quarter with a net income of minus NOK 11 million, or earnings per share of minus NOK 0.11. Excluding special items, the earnings per share were NOK 0.56, up from NOK 0.48 last year. Moving to our balance sheet and cash flow performance. On net current operating assets, our working capital continued to normalize, and ended the second quarter at NOK 731 million. Excluding the effects of IFRS 16, it ended at NOK 231 million. As previously guided, working capital is likely to fluctuate with large project work, and we continue to expect the level to gradually trend toward about 4% of group revenue over the next two to three quarters.
Excluding IFRS 16, we had net interest-bearing debt of NOK 1.2 billion at the end of the second quarter, up from NOK 940 million at Q1, reflecting the working capital outflow. Our net debt to EBITDA ended the quarter at a solid 0.8 times. As previously announced, we successfully issued a NOK 1 billion senior NOK-denominated bond in the quarter, secured at very favorable terms. This will primarily be used to settle the remaining 2019 bond maturing in October. At the end of Q2, we continued to have a strong financial position with a total liquidity buffer at a healthy NOK 7.2 billion. This includes our revolving credit facility with leverage covenant at 3.5 times net debt to EBITDA. As a reminder, our RCF and latest bond covenants are both based on frozen GAAP, i.e., pre-IFRS 16.
Our solid financial position continues to give us flexibility and good financial headroom going forward. Our cash flow from operations in the second quarter was NOK 55 million, even as the working capital continued to normalize. Our investing cash flows totaled a net negative NOK 192 million in the quarter. We continue to expect overall CapEx and R&D at around 3% of 2019 annual revenue with flexibility. Cash flow from financing was $561 million in the quarter, reflecting the change in our external borrowings following the successful bond issue. On to projects, where second quarter revenue was up 24% year-on-year, mainly driven by high activity level in the field design sub-segment compared to the same period last year.
This resulted in an underlying projects EBITDA of NOK 475 million, with a margin of 7.9% for the quarter, up from 6.7% last year. EBIT, excluding special items, was NOK 270 million, with a margin of 4.5%, up from 4.2% last year. We had yet another quarter of solid operational performance in our projects portfolio. We're still in early stages of execution on newly awarded work, in a very competitive market, it is important that we continue to realize significant benefits from improvement programs in order to expand the margins on this new backlog. Order intake in projects was NOK 2.9 billion in the quarter, down from a solid NOK 5 billion in the year earlier period. We booked a bill at 0.5 times.
The backlog in projects ended the quarter at NOK 19.3 billion. Some further details for subsea and field design within the Projects reporting segment. Revenue from subsea projects was up by 12% from the same period last year, driven by recently awarded work globally. Revenue from field design projects increased 31% year-on-year, driven by strong activity on several modification and hookup jobs versus the same period last year. In the second quarter, field design accounted for 61% of projects revenues, up from 58% in the same period last year. Second quarter order intake in projects ended at 0.5 times, with NOK 1.8 billion in subsea and NOK 1 billion in field design. Despite a competitive market, tendering activity remains very healthy, and we're still tendering for about NOK 45 billion of work overall in projects with a majority in subsea.
There's a high probability for several of these ongoing tenders to be concluded during the second half of 2019. Our services revenue increased 12% year-on-year, mainly driven by international growth in our production asset services sub-segment, which accounted for 58% of services revenues, up from 53% in the same period last year. Underlying EBITDA was NOK 210 million, with a margin of 14%, an increase from 13% in the same quarter last year. EBIT was NOK 147 million, with a margin of 9.8% versus 9.9% a year ago. The margins reflect good performance and increased activity level versus last year, as well as the mentioned effects of IFRS 16.
Second quarter order intake and services was NOK 0.9 billion, resulted in the second quarter book-to-bill of 0.6 times, mainly related to international awards. Despite the competitive market, tendering activity is healthy, we are currently tendering for around NOK 10 billion of service work globally. As a reminder, in addition, a part of services order intake is short cycled or book-and-turn in nature. Now over to the order intake and backlog performance for the group overall. The second quarter order intake was NOK 3.8 billion, with a healthy level of unannounced awards in several key regions globally, in particular within the subsea sub-segment. The order intake was equivalent to a book-to-bill of 0.5 times in the quarter and was 0.7 times for the last 12 months.
Our backlog totaled NOK 29.5 billion at the end of the second quarter, which is equivalent to around 1.2 times our 2018 revenue. The backlog for 2020 execution is about NOK 10 billion versus NOK 14 billion at the same time last year. This, combined with several ongoing significant FEEDs, high tendering activity, and a good level of unannounced and book-to-bill, gives us reasonable visibility in moving forward. During the quarter, we continued to increase our international order intake, and our backlog is now considerably more geographically balanced despite phasing out major projects in Africa. Order intake continues to be somewhat uneven, caused by large contracts and timing of sanctioning. As mentioned earlier, tendering activity remains high, with some key projects likely to be sanctioned during the second half of this year.
We're still engaged in tenders with an estimated sales value of about NOK 55 billion. As already highlighted, our backlog does not include part of our services business or potential growth or options on existing contracts and call-offs under frame agreements, as well as the full expected project value of some of the ongoing FEEDs. Finally, over to our guidance. We delivered a solid top-line growth of 12% last year, and we see our overall 2019 revenue up around the same level this year, in particular driven by the high activity levels in field design in the first half of 2019. This implies revenues in the second half of 2019 in line with the second half of last year.
For 2019 overall, we still see our underlying EBITDA margin up year-on-year, including the effects of IFRS 16. Excluding the effects of IFRS 16, we expect the full year margin around the current levels. The phasing of our secured backlog, combined with a very healthy level of unannounced FEED and tendering activity at this stage indicates a top line for 2020 in line with this year, pending successful outcome of some of the key tenders. As previously stated, the current industry challenge of phasing in new work awarded in a very competitive market means that a continued relentless focus on quality, execution, supply chain, and operational efficiency improvements are needed in order to lift underlying margins into 2020. We will also continue to leverage our differentiating front-end capabilities to capture opportunities and engage with our customers at an early stage.
As activity levels pick up further, it will be important to harvest scale effects from our very fit and streamlined organization and asset base. To sum up, we have a healthy backlog, and we have a solid financial position, which continues to give us increased flexibility and financial headroom to position our resources to fully take advantage of the recovery. We ended the second quarter by continuing to deliver strong project execution with good underlying financial performance and by continuing to build a geographically more balanced order backlog. We see good opportunities for increased order intake during the second half of this year. Thank you for listening. That was the end of our presentation here today, and we will then move on to Q&A.
Thank you. It would be good if you could state your name and where you come from before asking the questions for the online audience.
Good morning, it's Glenn Lunde with Nordea. You mentioned in your report that the market is showing increasing signs of recovery. Could you elaborate a little bit on what these signs are?
Okay. As you probably noticed, we had more FIDs this year than we had last year. You can see, especially in the second quarter, FID increasing several regions. Also the indications from front end, I showed last year that we had a record year. This year, we're actually replicating that record in the first half in this quarter, 74 studies. Clients are making us busy looking for ways of sanctioning more projects. Those are the signs we see. As usual, there's no guarantees if I follow this balance between supply and demand, so I won't elaborate on that. We believe that the offshore costs have been reduced a lot, and their projects will be sanctioned. You see a lot of activity also in the gas. I mentioned that.
Also tiebacks to existing facilities, as we have seen, actually during the whole downturn. We see more activity, I think, with the exception of, I think if you go for Mexico, the rig numbers have increased offshore almost everywhere. I think that's the signs I'm referring to.
Thank you.
Okay. Next question. Yeah.
Tommy Johannessen, SpareBank 1 Markets. You lowered your EBITDA margin guidance from 8.8% to 8.4%, and this is mainly due to field design activity in 2019, whereas you said that subsea will be the main driver in 2020 based on tenders. Just to get a feeling about the margin for 2020, should we expect a normal normalization sort of into 2020, or will?
Okay. We're not gonna comment specifically on margins for 2020, but, you know, as you point out, you see, you know, two factors, you know, going on at the moment. One is that we, you know, we delivered 12% growth on the top line last year. We deliver, you know, about to deliver another 12% this year. We're facing in a lot of new work. Of course, a lot of new work that has been tendered in a much more competitive landscape than the outgoing backlog. Some of this new vintage backlog is still in early phases of execution, and we don't see this full potential of this backlog yet.
We have to continue to drive through, you know, efficiency improvements, and we see very good momentum to drive the margin in that backlog in the right direction. As you point out, you know, we have a record high activity level in field design in the first half of 2019, which traditionally is driving somewhat of a lower margin than in the subsea side of the business, particularly on the brownfield side, where we're seeing very high activity levels. All in all, that is sort of leading us to indicate that we see 2019 overall ending up roughly around the current levels, margin-wise.
Okay, thank you. On 2020, backlog coverage is relatively weak when you look at consensus revenue estimates. How much of potential awards such as Jansz-Io and Gama could have revenue execution already in 2020?
Okay. Yeah, I won't comment specific on projects. You touched on a few projects that we believe will be sanctioned. Yeah, I think we've been there before. If you look back to the same time in 2017 and then 2018, we need to win work. That's always gonna be the norm. We have to win more work. What we see in terms of position we have with clients in the front end and you saw in the presentation, there are more FEED studies becoming FEED. The next step, of course, is FEED become projects. We see people moving faster and faster now from FEED to execution. That's the way to compress delivery schedule. We believe that we're gonna win the work necessary to deliver 2020.
That's why we said that. You know, we have to win and, but we are confident that we have, one, the execution muscles and also delivering so well to clients, people come back to you. That's usually the norm, right? We see repeat orders and so on. As we mentioned, there's some frame agreements that we signed that has no volume yet, but they will come. That's waiting for the call-offs. I think that we have to work, but we are confident we're gonna get there.
It's very important, this element of the FEED activity, which as you've seen and Luis pointed out, record high. It gives us a very good sort of visibility into where our clients are sanctioning-wise and, you know, what we are sort of getting ourselves into also from a risk point of view. Visibility is a completely different level than what it used to be. That gives us reason to believe that we're gonna be able to deliver a, you know, top line in line with this year, also next year.
Yeah. I guess the project you mentioned, they are live projects, so they should help.
Okay. Thank you.
Okay. Shall we take a few online questions before I move on? The first one is from Tord Aasen Augestad at SEB. How do you see revenue development in 2020 with backlog for execution next year, NOK 4 billion lower than at the same time last year?
I think I addressed that in the presentation.
Yeah. I think.
We just answered that question.
It's the same, it's the same question, basically.
You also answered the next one from Sahar Islam from Goldman Sachs on the margins. The next one from Lillian Starke at Morgan Stanley. Good morning. Within the list approaches you are tendering for, could you share in how many of these you have participated at the FEED level or what gives you the conviction of a stronger level of ordering take in the second half of the year?
Yeah. We usually don't comment on specific projects. Of several of those we are tendering now, we have done the FEED or we're doing the FEED now. In opera FEED, entry FEED. Yeah. It's a good proportion, we won't specify the numbers in the projects at the moment.
Yep. There's a question from Amy Wong at UBS as well. Can you comment on how or if customer behavior have changed in response to the oil price volatility in the first half of the year?
Okay, a good question by Amy Wong. Thank you. I think that there are several nuances, as I call it, in the market, and customers behave in a different way. There are some customers who do not take any notice of the oil price, and they continue moving or the volatility oil price, which we have to admit is much better than it used to be. The cash flow in the oil companies are quite healthy. We believe that the right clients who, and the right project will move forward. I think behavior, I don't think you're seeing a lot of change in behavior. I think people continue moving forward. Like everything else, people start getting used to the volatility and then life moves on.
Like for all of us, we just continue focusing what's important in our side. We should deliver as we're delivering now and also to continue pushing our cost base down, our efficiency up. I think the clients are the same. They're looking for the right projects, and they continue moving. Not a large change in behavior. The same, I would say the same cautiousness that we've seen to last year.
Yeah. Thank you. We have a question from Christopher Pande at Nordea. You expect the EBITDA margin excluding IFRS 16 for 2019 around current levels. Does this refer to the 6.4% in Q2 or the year to date of 6.8%?
It was meant to refer to the most recent quarter.
Okay. Any more questions in the audience? There is quite a lot more online, but we can take some more in the audience. Okay, I'll move on with the online audience. There's another one from Amy. Svein, congratulations and good luck in your new position. It wasn't the easiest period to be a CFO of an oil service company. My question is related to the dividend. How should we think about the cash flow profile of the organization going forward, and specifically about the timing of when investors could expect the dividend to be reinstated?
Yeah. As we have talked about previously, Amy, you know, our dividend policy remains. You know, we want to pay between 30% and 50% of our net profit, either through share buybacks or through cash dividends. During 2019, you have seen and you will continue to see a significant cash outflow related to this normalization of our working capital. Some of that normalization will also move into first half of 2020. In terms of CapEx levels, you have seen a period of very sort of modest, you know, CapEx needs. This year, you know, we're moving into a period where we are positioning ourselves for some new business models.
As I said, about 3% of revenue this year, and we have a lot of flexibility on it. Flexibility on the CapEx side also remains for 2020. Of course, we are optimistic about the future and activity levels picking up, and hence we want to continue to invest. It's very easy for us to tune that investment during 2020. Towards back end of 2020, we should return to free cash flow generation, and hence we have sort of opened up for this potential dividend to return in 2020 for 2019. It's still too early to say, but that would be our communication.
It's up, it's also up to the board, it's also up to the board to decide, so.
We continue with a question from Michael Alsford at Citi. The weaker order intake in second quarter, what do you see as the reason for this? Was it due to type of project awards, more integrated awards, geography or more aggressive pricing?
Okay. I think that's a combination. You know, those orders, as you know, they are lumpy. We've seen in end of 17 and 18, the beginning of 18, very large order take for Aker Solutions. It always depends which clients are awarding. Some of the awards that you might have seen announced are from clients who have frame agreements with our competitors. We are not... 'cause we're not losing a lot, actually not losing any projects. It's just some of those projects are being awarded directly because maybe they are tiebacks to existing fields. We had ours last year with Dale and so on, that we provide the first phase or second phase, then you keep getting more work because it makes sense. That's what it is.
In terms of integrated, also the integrated offers, if you look with very few exceptions, they're actually on fields that the people are the incumbent, and they have bundled or they have bundled afterwards. Certainly I think it's still below 20% of the projects being awarded under the combined bundle, as you call it, SURF and subsea. Yeah, I think it's a combination. I think it's just a matter of time and the clients who are searching at the moment.
Luis, there is a follow-up question from Sahar Islam to the last one. How many of the NOK 55 billion of tenders are integrated bids? Are you seeing a change in pricing as tendering activity picks up?
Okay, I'll take the first one. I will not give you specific percentage of integrated, but quite a few of those are being tended together with our global partner, Saipem. The second part was?
The second part was, are you seeing a change in pricing?
The pricing? Yeah.
Yeah.
I think, I think the market is still competitive. I believe that as people get more occupied, the price will come up. Right now, I think, we have just to focus what we focus, which is maintaining our cost base down, and also, improving efficiency because, you know, waiting for the price to come up. I think in some areas of our business, there is, still quite a lot of capacity, subsea is one of them. Of course, the activities is increasing. You see by number of three counts that things are moving in the right direction, but there's still capacity there, and it's still very competitive. People still want to fill that capacity in some segments. I think the prices are still to be increased.
There's still some questions from the online, but we have time if there's anyone in the audience who have thought of a good question to ask.
Just keep rolling.
Okay, we keep moving. Next question from David Farrell at Credit Suisse. Are you confident that as the FEED activity recovers in West Africa, that the alliance with Saipem can secure its first award?
Yeah. I think Saipem has strong positions in some of the African countries for sure. Also the asset base of Saipem is unique. They have very good fleet. I think that suits that deeper market in Africa. Of course, when it comes to the Aker Energy, they want to follow an alliance, same model as Aker BP, that will be probably Subsea 7. Apart from that, yes, I'd like to make clear that both Saipem and ourselves, we're not prepared to sacrifice margins to set the track record. We are established companies. We have very good technology, fantastic facilities and very well-positioned to our front end, our engineering.
The idea here is actually to find the right project, and when that happens, then you're gonna execute it. Not sacrifice margins, and also take more risks, sometimes very large risks, just to set track record. That's not our intention.
Okay. Thank you. Svein, a question to you from James Evans at Exane BNP Paribas. Svein, you are moving on to the CFO role of Aker Solutions' largest shareholder. Will you be keen for the company to pay a dividend to its shareholders at the end of the year based upon what you can see now?
As far as I know, the Aker plans, they haven't based their plans on a dividend from Aker Solutions in the short term. They are aligned with our desire as we start generating free cash flow to get back to our dividend policy. It's something that they will have to decide once we get into AGM times next year.
Okay. Question to the both of you from James Thompson at JPMorgan. Of the NOK 55 billion tendering in 2019 and 2020, approximately what % are you seeing being awarded in 2019? The second question is separately on revenues. Just to double-check, you see potential for 2020 revenues to be flat on your new upgraded 2019 guidance?
I can start with the orders. We believe there's a large part of NOK 55 billion will be awarded in the second half. This is the tendering pipeline. Those are tenders, most of them have been delivered to clients, or they are in clarifications. A lot of them are in clarifications, and of course, some of them are waiting sanctioning. We believe the large part of those NOK 55 billion will be awarded in the second half. That's been the case throughout the last two years. Of course, it's very encouraging to see that every quarter we have between NOK 50 billion and NOK 60 billion in orders, even though projects are being awarded. It shows that the pipeline is being replenished, which is good.
The second part of the question was 2020?
Yeah. It was,
Yes.
If you wanted to double-check that you see the potential for 2020 revenues.
Yeah.
-to be flat on your new upgraded guidance.
As we said, of course, it depends on successful outcome of some of the key tenders in the second half. Given where we are FEED-wise, you know, we are very sort of intimately familiar with where the clients are decision-making wise, and what the economics are on some of these prospects. It's a much better position to be in related to your visibility on where they are decision-making wise. You know, we have been able to hold our tender volume up at NOK 55 billion. You know, despite, you know, projects having been sanctioned and awarded during the first half, the tender volume keeps up. You know, this looks at this time of the year, you know, very good to keep that momentum into 2020.
I'll just remind you that 2019 over 2017 is gonna be up 25% for Aker Solutions. It's phenomenal growth on the top line over the last two years.
Yes, I should challenge that nobody else in the industry is doing that, so we're very proud of that. It's a reflection of our strong market position also in Norway. Again, it's nice to think about the fact that the revenues we have today in terms of volume, considering the prices that we had, the reduction in prices, is probably above 2014 volumes. That's why I say a much more healthy and fit organization delivering volumes faster period than we used to deliver in 2014. I'm very proud of my team on that point.
Then, you know, you see that, you know, year to date, we have booked, you know, 0.6 times book-to-bill without any sort of major announcement. There's a very healthy, you know, stream of unannounced and book intern activity. It gives a very sort of solid foundation.
Yeah, we should be the norm going forward.
Yeah. There's a question from Michael Alsford at Citi. Could you talk about the rationale for the increased stake in Principle Power? Could you talk about the cost competitiveness of floating offshore wind now, and how has it improved?
Okay. I think, as I said before, there are only two companies in the world that has an existing track record in offshore float wind, which is, I think, an area in wind that we believe has more potential. Principle Power is one of them. We need to find that back then. It's a great company, great knowledge, and as I said, good track record and a lot of customer engagement through their knowledge of floaters. That associated with our floating knowledge is becoming quite powerful. You combine that with our project execution so forth. For Principle Power is also important that they are part of the partially part of the Aker family. We have our cable. The whole offer fits very well our execution model.
Taking more stake on Principle Power is a natural thing to do, and it was a plan. We got to know the company, we got what we even like more. There was initial period and now we increased our stake there. In terms of competitiveness, this is a new industry that's being formed, and we believe being a far more high-tech, almost a niche that will be better margins to be captured. Not everyone can do it like you see in onshore wind or in some cases of offshore bottom supported wind. I think it's very good. We have more, we have one project right now, already progressing in California, the studies and probably start to move execution quite soon, probably from next year.
You have some others in the pipeline. I think it's promising and we like what we see.
With this most recent increase in shareholding, we're moving up to sort of equal footing with our partner and also shareholder in Principle Power, the Portuguese utility company, EDP.
That's a very good point, too. Just actually has developed a new entity together for offshore float wind together with ENGIE. Very powerful partner, and they also like what they see. Our execution arm is muscle is quite interesting to them.
Okay, we have our last online question from Mick Pickup at Barclays. Green initiatives are increasingly becoming your focus and differentiator. Given that the market has a phenomenal appetite for this at present, how big do you think it could become in your vision of the future? There's a follow-up question: and how has your interaction with investors been?
Okay, that's a very good question for me, as usual. I think we've been a big believer on, for example, carbon capture for decades, you know, to the for market clean now carbon capture. We're very pleased to see that people are really taking to that now. We saw actually an opportunity outside the oil and gas industry in Holland. We see a lot of interest, a lot of studies. We believe that can grow. Very hard, of course, to put numbers to it, but we do believe that's gonna be a significant share of our business in the future.
Also another point that we don't touch a lot is that, we have to get that message out there, is that, we are working very closely with clients to reduce the footprint, CO2 footprint of existing fields. I mentioned earlier today the BP Clair South that we are doing a pre-FEED for BP. The focus there is to develop this platform in the future, you know, with less people flying in, less carbon CO2. You have the subsea compression, example of Jansz, for example, and others that, they're bringing to the bottom of the ocean, reduce a lot the energy consumption, hence the CO2 consumption. We need to work very hard, and as we find fields from shore, so many things we are doing with clients to reduce the CO2, footprint of offshore development.
That's very important as well as developing new markets. Yeah, I will don't give any numbers to disappointing of Mick there, but we're probably gonna come up with that message, I would say, quite soon. We have to analyze our strategy with the board, now beginning of the second half of the year, and then we'll come up and tell you what we see. We see that's gonna be a big percentage of our revenues by 2030. That's. Make that very clear.
Okay. Thank you to the online audience and the audience in the room. We can move on with some one-on-one interviews.
Thank you very much.
Thank you.