Welcome to Eolus Q1 Report 2022. For the first part of this call, all participants will be in a listen-only mode, and afterwards, there will be a question-and-answer session. Today, I'm pleased to present CEO Per Witalisson and CFO Catharina Persson. Speakers, please begin.
Okay, thank you, and welcome to the presentation of Eolus' Q1 report. We can turn directly to slide number two, the Q1 key takeaways. We had net sales of SEK 432 million. We made a net loss of SEK 138 million, and the vast majority of revenues and costs are related to the Øyfjellet project. We reiterate that we aim to hand over the project to our customer, Aquila Capital, by the end of June 2022. During the quarter, we have faced further challenges and increased costs related to the previously communicated delays for that project, and we'll come back to that more in detail later in the presentation.
The quarter also showed a significant growth of the project portfolio where we added more than 2,000 megawatts during the quarter. We procured wind turbines for the Swedish projects, Skallberget, Utterberget, and Tjärnäs totaling 94 megawatts, and construction have started for those projects. When we presented our Q4 report, we also communicated updated financial targets for 2022 to 2024 based on our new business plan. After the end of the first quarter, Eolus and Hydro REIN signed an agreement with the investor MEAG regarding the divestment of 75% of the Swedish 260 megawatts project, Stor-Skälsjön, and we aim to close that deal during Q2 and start revenue recognition thereby.
Despite the loss for the quarter, Eolus has a financially strong position. We have an equity-to-asset ratio of 60%, and a good net cash position. We have a strong project portfolio now amounting to almost 16 gigawatts. We can turn to the next slide, number three, please. To get just some short introduction to Eolus, we are a developer of renewable energy, developing renewable energy projects. We're active in the value chain all the way from greenfield to the operational phase of the facilities. We develop projects, we sell them, and then we construct on behalf of our customers. While in operation, we provide technical and commercial asset management services during the lifetime. We've been in business since 1990.
We have constructed more than 660 wind turbines so far. Technology-wise, we obviously come from the onshore wind field, but in our portfolio, we have also offshore wind projects, solar PV projects, and energy storage projects. We're operating in the Nordic countries, in the Baltic states, in Southwestern U.S., and in Poland. We can turn to slide number four, please, regarding Øyfjellet, which is a 400 MW project with an expected annual production of 1.3 TWh of renewable energy. To put that in perspective, it equals roughly 1% of the electricity consumption in Norway or in Sweden for that matter, from a single wind farm with 72 wind turbines.
All the turbines, all 72 turbines were erected and mechanically completed in 2021, but we didn't succeed to have them fully commissioned together with our suppliers. As of today, 53 turbines out of the 72 have produced their first kilowatt hour. There is an intensive work ongoing with commissioning on and completion of the remaining wind turbines. Finally now, of course, weather conditions are improving. We iterate that we aim for a handover to our customer, Aquila Capital, by the end of June 2022. Of course, there are a major workload that is outstanding and remaining, and that we plan to complete before the end of June. Previous delays were mainly related to COVID-related effects during 2020 and 2021.
That meant that led to construction falling behind the scheduled plans. Although we were investing heavily in extra resources to catch up, it was not possible to complete the project before the year end. We have experienced slower progress during the first quarter than we expected due to the harsh winter conditions at site. This has led to a lower Degree of Completion than expected and increased costs. Therefore, we had to adjust the forecast for the project margin. That means that previously reported results from the project based on the previous forecasts had to be adjusted during the quarter, and this has had a negative effect on the results.
The vast majority of both revenues and costs during the quarter are related to the Øyfjellet projects. We have reduced our expected margin for the project significantly. I would also like to highlight that the contractual set up protects Eolus from making an overall loss from the project. The contractual basis is that we were willing to risk our margin from the project, but not more than that. We can turn to slide number five, Øyfjellet construction, where we had some photos from the site to just give you a feeling for the conditions. We have more than 70 kilometers of road within the site.
You can see on the picture in the upper left corner the excavator and the dumpster truck during snow clearing. In the middle, you can see we've used a lot of tracked vehicles during the winter operations to reduce the need for snow clearing and to go above the snow instead of digging through it. That's not possible at all locations. You can see the depth of the snow up to the picture at the right-hand corner. Just to give you a feeling of the challenging conditions we have faced during this winter times.
Of course, it led to a lot of cost overruns and also lower early generation revenues, since turbines have come online later than expected. We can turn to page six, recent events. I mentioned that we've procured the turbines for the project Skallberget, Utterberget, and Tjärnäs. We did that in February. It is 16 Siemens Gamesa turbines of a model with a capacity of 6.6 megawatts each.
They both these three projects, Skallberget, Utterberget, Tjärnäs, are located in the price area of SE3, where we have higher prices than in the northern parts of Sweden. We have also signed a BOP, a balance of plant agreement for the civil works, and we have started the construction works. The completion of the projects is expected to be during the fourth quarter of 2023. We are marketing these projects, and we're bundling them together with three turbine projects called Rosenskog that is also located in price area three in Sweden. That will make a total bundle of 117 MW.
We expect to sign a deal with a customer within a couple of months for this cluster. We go to slide number seven, please. Turning to subsequent events, in April, we announced the sale of the joint project, Stor-Skälsjön, that we own jointly with Hydro REIN, where Eolus holds 51% of the project and Hydro holds 49%. Eolus will now sell all our share of the project for a purchase price of EUR 18.4 million. Hydro will remain as a minority owner of the project with a 25% stake. We have earlier announced that we will construct also here Siemens Gamesa turbines with 170-meter rotor diameter.
Construction has started, and commissioning is planned for the autumn of 2023. Eolus and Hydro will jointly also construct the wind farm on behalf of MEAG, the investor, under a construction management agreement. This is important, since this means that we will only manage the project contracts and get revenues for that. We will not have any cost of goods recorded in our profit and loss statement, only the revenues from the construction management agreement and, of course, from the selling of the shares of the company. The revenues expected from the construction management agreement amounts to approximately EUR 42.3 million to be shared between Eolus and Hydro.
Eolus' share would be 21 expected to 22 million EUR. That outcome is dependent on how the construction goes versus the planned construction budget and timeline. Eolus has also been entrusted to provide technical, operational, and administrative services for the wind farm for 15 years once in operation. We can switch to slide number eight, showing the projects we now have currently under construction. We have mentioned them all except for the small Timmele project also in SE3 that we expect to complete during 2023. It's only two turbine projects.
With 786 megawatts under construction, which is record high, but of course, Øyfjellet makes up 400 megawatts of those, and that we expect to have completed soon. We switch to page nine, showing our mid-stage, our late-stage development portfolio, which I would say determines our midterm success for the coming years. That's why we communicate around these projects in our quarterly financial reports. As you can see, the first projects down to number seven, there are Swedish onshore wind projects. We're adding also the projects from foreign markets and from other technologies.
We can switch to page number 10. That shows our total portfolio now amounting to almost 16 gigawatts, spread across the different markets and technologies. On the top to the left, you can see the split by technology. Our onshore wind portfolio is roughly half of the total portfolio, but offshore solar and storage are increasing rapidly. Of course, offshore projects are so large. As a portion of the total portfolio, that will definitely increase over the coming quarters. At the bottom to the left, you can also see the split of the portfolio technology-wise, market-wise, and where they are in when it comes to maturity, early development, late development, or under construction.
We now, market-wise, we have roughly 50% of our portfolio in Sweden, but more than 1/3 of our portfolio is located in the U.S, in the southwestern states of California, Nevada, and Arizona. We can turn to page 11. As I mentioned, we have an increased focus on offshore wind. Throughout many European countries, offshore wind will definitely be needed to replace nuclear and coal-based plants over the coming decades. The recent months development with the war in Ukraine has definitely showed the need to increase the self-supply, the degree of self-supply within Western Europe.
The electrification trend also means that a lot more electricity will be needed, and the cheapest way to accommodate to that will definitely be to include a lot more offshore wind. We mention here some of our projects that we are working with. We have since earlier the Swedish project Westwind located on our west coast of Sweden, Arkona south of Sweden, and [Hollandshåla] between Sweden and Denmark in Öresund. We have during the quarter added the restarted Blekinge offshore project with a new layout of 1,000 megawatts.
After the quarter, we have also started the development of the project Najaden in the Baltic Sea, located east of Gävle. We have also sent in application to participate in the second Polish round of offshore wind projects. There are no clear decisions about that yet from the evaluating authorities. We also have several early-stage projects in the countries around the Baltic Sea, and that we will bring to the project portfolio in the coming quarters. We can turn to page number 12, and I will hand over the word to our CFO, Catharina Persson.
Thank you, Per, and Hi, everyone. I will go through the financial summary for Eolus's first quarter 2022 and also highlight some of the amounts. If we start on page 12, I think you should see we had net sales of SEK 432 million, and it increased with SEK 190 million in comparison with the same period last year. Revenue recognition from project Øyfjellet is included according to the current degree of completion. For quarter one, the degree of completion was 11%, and that was lower than we internally expected, as Per has already mentioned. The total degree of completion amounts to 76% for the project.
We have a negative operating profit of SEK 158 million, and because of previously communicated delay in the project Øyfjellet, we have also updated the forecasted margin for the project and estimated higher costs. That means that previously reported results from the project, which were based on forecast at that time, have been adjusted during this quarter and have had a negative effect on the results. If we go to expenses for Eolus Group, it amounts to SEK 24 million, and that is in line with our expectations in order to reach the targets in the new business plan for 2022 to 2024. We have net from financial items for the quarter SEK -1 million, and net loss for the period amounts to SEK -138 million.
If we go to next slide, number thirteen, you find the balance sheet. End of March, we had SEK 65 million in total fixed assets. When we go to the inventories and work in progress, that amounts to SEK 904 million SEK and advanced payments to suppliers have increased during the quarter to SEK 240 million. These items include 100% of project Øyfjellet. That was the project we acquired 51% by Eolus and 49% by Hydro REIN last summer. We have optimized the project into modern wind farm that is currently under construction. Eolus has beginning of Q2, the second quarter, signed an agreement with MEAG to sell Eolus' part of the project, as also Per mentioned.
If we go to the cash, we had SEK 676 million end of March, and total assets amount to SEK 2,021 million . When we go to the total equity of SEK 1,211 million , equity of SEK 360 million is related to the minority stakeholders in Øyfjellet project. We have interest-bearing liabilities of SEK 331 million . That amount takes less of the liability to SEK 2,021 million . If we go to the next slide, number fourteen, we have some key figures. On the top, you can see net sales for the quarter again, but it's divided into Eolus' two segments. Net sales for product development amounts to SEK 420 , with a negative operating profit of SEK 160 million.
The next segment is asset management, where we had total net sale of SEK 7 million and an operating profit of SEK 3 million. We also have earnings per share that is a minus amount of five, loss per share for the quarter will be SEK -5.55 . We have equity per share about 34 SEK. We still have a stable net cash position with a net cash of SEK 345. When it comes to the proposed dividend of 1.2 and 1.5 SEK per share, that corresponds to the unchanged level considering that the previous year comprised of 60 months. Decision for the dividend will be made at the annual meeting tomorrow here in Hässleholm.
As you can see on the average number of employees, we're ramping up the number to match the product portfolio and to reach the targets in our business plan. The average number of employees for the quarter is 64. We have an order backlog of SEK 1.2 billion, and we have asset management assignments for 914 megawatts. We also want to highlight that Eolus has a strong balance sheet with equity-to-asset ratio of 60%. This means that we have a strong foundation for the future, despite we have a weak result in this quarter. Return on equity after tax is negative due to the net loss.
If we go to the next slide, number 15, you have all the projects under construction, and you have on the right hand the degree of completion of the project. We have in total 786 megawatts under construction end of March. Only project Øyfjellet had a degree of completion, as you can see, and that is total 76%. In the first quarter, Øyfjellet had 11% degree of completion, and that means that we have another 24% to account for before the project, Øyfjellet, is completed. The rest of the project besides Øyfjellet amounts to 386 megawatts. They are categorized under construction due to that we have signed turbine contracts.
Revenue recognition will start when we have agreement with customers signed, and then and also predefined construction milestones to be achieved. Then I hand over to Per again.
Thank you, Catharina. We can turn to page 16, other highlights. I just want to mention also the recruitment of Magnus Axelsson as Chief Operating Officer, and Karin Wittsell Heydl as Head of Communications, Sustainability and IT. As Catharina said, we have our annual general meeting tomorrow. The board have proposed a dividend of SEK 1.50 per share. We can turn to page 17. That was all what we had to present. Thank you for listening, and we're giving the word back to the moderator for instructions regarding questions.
Thank you. If you do have an audio question for the speakers, please press zero one on your telephone keypad to register. Once again, that's zero one on your telephone keypad to register for any questions. Since there are no audio questions registered, I'll hand back to our speakers.
Okay. Have you received any questions by email, Catharina?
No, not so far. No questions.
Okay. We thank you all for listening in, and we wish you all a nice day. Thank you.
Thank you.
Bye.
Thanks for listening. Bye.
This now concludes our conference. Thank you all for attending. You may now disconnect your lines.