BW Ideol AS

OSE:BWIDL

Earnings Call Transcript

[Operator]

Hello, and welcome to the BW Ideol Q4 2021 presentation. [Operator Instructions] I'll now hand over to your speakers for today. Please go ahead with your meeting.

[Paul de la Gueriviere, Chief Executive Officer]

Yes. Good morning and welcome to BW Ideol Q4 2021 call. I'm pleased today [indiscernible] 2021, the company has reached several important key milestones, including the award of 1 gigawatt project in Scotland further strengthening the company and demonstrating its capacity to become a floating wind market leader and for witching searching bottle by on. Next, please. BW Ideol value is unique. It has the credibility to time with leading utilities having ability to team up with leading utilities to win coming tenders. Next, please. So we have a fully proven technology that has absolutely no impact on windowing performance that has demonstrated to be a cost optimum from design to operation, so covering the whole life cycle of the assets, solutions that provide flexibility to maximize local content and to demonstrate government awarding, so projects that we can generate jobs locally, a unique proposition to cover one of the main risks that is the floater and wind turbine integrations. Finally, a demonstrated industrialization process, meeting the supply chain requirements and over 10 years of floating wind experience on multiple projects, offering a unique credibility and capacity first to understand risk and then to mitigate them. Next, please. So we are among a very few companies in the world that have more than 10 years of engineering, execution but also maintenance experience in floating wheel assets, in particular on the Floatgen assets that we own 100% and that we operate since the -- we have built a sizable project pipeline as codeveloper in Japan, Europe and the U.S. We have been awarded close to 1 gigawatt project in Scotland in January 2022. We'll come back to this strategic point altering the presentations. Will enter into the construction phase of the Elmed 30-megawatt project in the soft part of France in the first semester of 2022. We are in the final stage of the final investment decisions. And we have no more than 3 years almost 3 years return of experience on both our assets in France, but also in Japan in a very challenging environment, including entire. We have an integrated team of more than 70 experts in France, in Japan, but also now in the U.S. and with the support of BW offshore unique experience and global presence and coverage. Next, please. So the key highlights for this quarter. Next, please. So we in January, 2022, we have been awarded by [indiscernible] Scotland, a 1 gigawatt project as part of the ScotWind tender. Together with our partners in consortiums with Elicio and BayWa r.e. We have also signed by the end of December, early January, an investment agreement with the leading Japanese utilities job and the ADM investment that is fully controlled and owned by the French government to give us the flexibility to finance a large pipeline of projects, floating wind projects in development. We have also in December, acquired a 5% ownership in the 40-megawatt aimed project in terms of part of France. In October, we have passed an important milestone in our Californian part of project, the Vandenberg Air Force Base projects where the California Statement Commission has approved to pass to deter environmental impact report. That is the final step before consulting, and we can report by the end of the year, a cash position close to EUR 43 million, giving us the capacity to support our growth strategy. Next, please. So we are continuously expanding our project pipeline in partnership with strong partners. Next, please. So internally, Crisco has published at the conclusion of the ScotWind tender process. In total, close to 15 gigawatts of protamine projects have been awarded. You can see on the map on the right side. The green area is the sites that were awarded, part of it in [indiscernible] and part of it in floating wind, based on floating foundations. And the red box is a site that we have been awarded in the construction, where we had a 33.3% ownership. We benefit from the local presence of BayWa r.e. in Scotland and a large experience of BayWa r.e. to develop onshore wind projects and offshore wind project in Scotland and the support of Elicio, that is the operator and majority owner of offshore wind assets, in particular, in Belgium. The site is for potential capacity up to 960 megawatts. It has -- it is the conclusion of the more than 3 years of stakeholder engagement, both by [indiscernible], Scotland, and by consortium 1 of the best sites that has been awarded during the tenders. We have excellent wind conditions. We are protected from some massive weather conditions. As a site, it's in the water date between 75 and 105-meter. We have already secured grid applications. And we have also signed an exclusive agreement with the land owner to secure the connection point to the shore. It's a site that is largely free from any environmental and marine conflicts or constraints. So we target to have the construction ongoing by 2030. For a total of around 60 winter wines. So we are going to pay in April 2022 an option fee that is in total for the consortium GBP 33 million. And we have also already signed engineering service agreements and the technology license agreement that are securing revenues for PWT. Next, please. But in addition to the site awarded, we are quite uniquely positioned to serve globally this large market. as we have signed with the port of Artis, and excessive agreement by the end of 2021 to create a multi-project construction line on this year. That is amongst a very few yards available globally in Scotland. So many developers have committed to manufacturers, factors in Scotland, but you have clearly a bottleneck in the supply chain in terms of yard availability. And on our side, we have been able to secure one of the largest yard facility that is still available in Scotland. So serving not only the Scott win site awarded currently, but also in addition potentially a new tender that has been announced by currency at Scotland, what is called into tenders has been confirmed to be issued by mid-2022 that we'll target to have innovative projects and also projects serving the power supply to oil and gas platform. Next, please. So it's a good illustration of our positioning and the way we create value. So with the Scott win award, we have a clear demonstration. So we have signed engineering contract with for an amount between EUR 4 million and EUR 5 million. We have signed technology license agreements that will imply that we are going to receive around EUR 15,000 per megawatt around [indiscernible]. We are going to invest during the development phase, a relatively reasonable amount of financing together with our partners and we have the flexibility to divest partially or ownership at different stages in the project. So for example, after consulting and before FID or after the commercial operation date. It's also globally -- the Scottish market is a good illustration of we can do both as codeveloper but also as the PCI contractor because we'll be involved in this codevelopment with partners on this site, but we also have the flexibility to be positioned as photo providers on other sites developed by other developers that have not yet selected a technology and it's an important fact to keep in mind is that we are among the very few sites awarded Pelon specific technology. most of the site on the other side have been awarded without appreciated technology. Next slide, please. In addition to this key milestone in Scotland, we are progressing on many other project and markets, in particular in France. So we have team up during 2021 with EDF Renewables that is the main and the leading utility in France that is currently developing and also building for offshore bottom fixed project in France. The tender, it's for up to 270-megawatt projects as the tender has started in June 2021 with 10 consortium only that have been presented by the French government in September 2021. with the start of what is called the competitive dialogue. So it's an open tendering process with submission of applications that is targeted in November 2022 for final decision stated in Q1 2023. As mentioned before, we have also pricing a lot on the Med project. We have taken a 5% equity ownership in December 2021. not 2022, 2021. We have signed engineering and license agreement in April 21. So we have invoiced most of the engineering activities and the word fee will be with the invoices in the first semester of 2022, especially in connection with the final investment decision that is expected in the first semester. As a reminder, this project is 3 x 10-megawatt wind turbine. It's a 10-megawatt Visas winter line. So one of the most powerful wind turbine currently in the market. Next, please. We are also placing in other strategic markets. So in the U.S., the Bureau of Ocean Energy Management, announced the plan to issue new leasing rounds before 2025, including around for floating wind projects both in California and in Oregon and in Maine with the first tender expected in California by the end of where we are currently in discussion for which we are currently in discussion with various financial partners. We have set up at the beginning of a team in California. We have more particularly hard, a very senior experienced offshore wind developer that has been working on the U.S. market for several years. That has started to work with us and that is based in California in February this month. We have also progressed on our 40-megawatt pilot project of the vendor space. for space. As mentioned before, with the environmental assessments done by the Californian statement Commission that has approved going further and going into the next step. During 2021, we have also signed another development agreement in Japan, and we are currently developing a pipeline of close to 2 gigawatt project in Japan with leading Japanese utilities. And we have also reinforced the team with backing of senior business developer that has expensive, project development background, especially in Japan, that was involved in bottom-fixed tender in the first part of fixed tender in Japan. Next, please. Yes.

[Nicolas de Kerangal, Chief Finance & Partnerships Officer]

So on the financial overview, so we publish our results yesterday for the full year. The main highlights are the following. In 2021, we registered a revenue of EUR 2.2 billion. So this is the revenue that has been consolidated between March and December 31. So this revenue was mainly derived from the engineering activities we performed on the met project trend and also on some feasibility studies for customers in Japan. We also present other income of EUR 1.4 million. This relates to the French tax credit mechanism that we are able to secure every year as we keep investing on R&D projects. The net operating cash outflow for the year 2021 is at EUR 5.9 million close to EUR 6 million, demonstrating that we have a disciplined cash management approach when it comes to operational expenses. We expanded most of -- a large portion of this operating cash outflow comes from the team that we expanded over the course of last year. from 55% to close to 70 employees at the end of the year. Nonetheless, we do not expect to increase the team at that pace in the in the year 2022. There will be only a marginal new hiring potentially on the business side. But for now, no further hiring activities on our side. So on the investment and on the investment side, we raised EUR 61.1 million in the course of Q1 through our listing on Euronext growth. We -- that allowed us not only to obviously finance our operating expenses but also to invest in strategic assets that we have highlighted before. So the deal with other Sports came with a payment on the equity part right of EUR 5.8 million. We also took the 5% stake in Elmed at the end of 2021. The other CapEx remains fairly limited, mainly relating to, as we said, some capitalized and the expenses as we are continuing to invest in technology development to optimize our portfolio of knowhow and technology and on some upgrade works that were performed on the flower over the summer. So in conclusion, we -- our cash position is healthy. We have close to EUR 33 million in cash at hand at the end of the year, which allows us to do not have any short-term cash requirements. Obviously, as the pipeline, especially on the code side expand. This will require additional coming that we expect could potentially happen next year. Next, please. So it's -- so in terms of financing, as we mentioned, we signed a deal investment agreement with Jera, which is the Japanese largest utility and Adnan, which is a French state-owned investment company backed by the French Ministry of Environment. It's a deal which is focusing on providing additional financing to Ideas it is to develop projects. So the funding will be mainly focused on cofinancing the development phase of some projects that we would bring to this investment company. BW Ideol will remain the controlling and main shareholder of this company with 51% of the new entity. It is based on a long-term relationship with both parties. ADM is a long-term back long-term partner pills. They have been involved in financing our demonstrator back a few years ago. And they are also involved on the financing part of the one project. So it consolidates further our partnership with them. And as for Gera, it's a strategic partner for us. when it comes to global development for projects unfold. Next please.

[Paul de la Gueriviere, Chief Executive Officer]

Yes. Thank you, Nicolas. So it's also demonstrating our capacity to have flexible financing tools. So in order to optimize more access to capital. So as a summary, next side, please. So we are in advance in our plan to reach our 2030 ambition. As a reminder, we have communicated on the fact that our ambition is to be involved in 10 gigawatt of floating wind projects by 2030, [indiscernible]. We have currently around 1 gigawatt of projects under development projects that have been awarded, so including the Scott win project, but also the met project and the [indiscernible] project in California, and we are also -- we are involved in 2.2 gigawatt of substantiated pipeline, substantiated pipeline, meaning projects for which we have signed agreement with leading partners for a specific site and targeting a specific tenders. So our substantial pipeline include the soft butane tender in France with EDF and Maple Power as the agreement that we have signed this year a project in Taiwan and some of the projects we are developing in Japan. We have, in addition to that, around 1.6 gigawatt of opportunity pipeline opportunity pipeline, meaning standards that have been announced by government with both the timing, the size and the capacity opportunity pipeline before 2024. So it's really the number of tenders that are expected before the end in France with the tenders on the maintenance cost that will start this year and another tender in 2024 for one gigawatt tenders that has been announced by [indiscernible], Scotland, that is expected in 2023. The Scotland into tender that has been confirmed by Cristo to be issued by mid-2020, chose the California tenders where BOEM has confirmed that it will be issued by the end of 2022 or early 2023. So a tender in Norway that is expected by the end of 2022 or during the course of 2023. Tendering in Oregon, another one in Maine and also tender expected in Spain. So giving us quite confidence in our ability to reach an advance our ambition. Next, please. And this portfolio of projects is based on existing projects. So as we have mentioned, in France, we have 2-megawatt foot project in operations, met 30 megawatts and this partnership with EDF and Maple. In Japan, we have one asset in operations, the BK and joint elopement agreement for up to 2 gigawatts. In the U.K., we have the Scott win sites and partnership with support of our this year, and we have this pilot project in California and the upcoming tender of BOM and in other geographies, like in T1, we have a service agreement signed. Next, please. So what is interesting, it's also the emergence of other markets. So for example, in Italy, we have signed during 2021 as the head of terms with the partners for a project close to 1 gigawatt. It's a market that is under consolidations with several opportunities with especially a very good condition for floating wind projects around Cecilia and Sardinia. In Norway, we expect the Norwegian government has confirmed its weakness to progress on offshore wind. So with the first tender for [indiscernible] project that has very recently been confirmed for 1.5 gigawatts and a plan for floating wind tender that will come after. You have currently some initial development in South Korea, even -- there is no specific offshore wind support mechanism. So it's a market where you have to compete with the renewable energy sources. There is a potential in Taiwan for a floating wind project after this first rounds of tenders very focused and dedicated to button fix. And we -- there is also a strong wins of the Spanish government to progress and especially on SaaS dedicated to floating wind. Next, please. So as a summary, is Scott win award for us. It's a strategic milestone for the company. it's a validation of the fact that we -- or technology is quite unique. Very cost efficient and demonstrating the capacity at the same time to create local value creation to create local value and to create local jobs and so demonstration of our strategy as codeveloper with all these benefits and more capacity, the capacity of the consortium with us to have a different offers and orders leveraging on our track record on the technology. We have made significant progress on key milestone on the software tender, termed project and our California pilot projects and we are preparing a new consortium for this large number of tenders, so more than 10 gigawatts of tenders come in the next 3 years. At the same time, focusing on cost and CapEx discipline while developing our funding capacity. So as confirmed before, we are well on track to reach for 2030 ambitions. Next, please. So we keep with our strategic goals. So to leverage on BW Offshore support to remain focused on key strategic markets especially in France, Japan, the U.K. and U.S. in partnership with world-class players. So really focusing the partnership the competence that we bring in to the technology side and teaming up with utilities that have the experience in managing stakeholders, getting permits in managing to impact assessments and we keep or really move our positions and we continue to invest in R&D in order to remain at the forefront of the floating wind development. So I think it's time for the Q&A session. Thank you very much for your attention. I'm happy to answer any questions that you might have.

[Operator]

[Operator Instructions] We have one question from the line of Ivan Gatwick from [indiscernible].

[Unknown Analyst]

I have 2 questions. The first one is on revenues and if we should expect a ramp up in revenues in 2022 from maybe the Elmed project? Or is revenue ramp up something to expect first in 2023. And the second question is, where will you produce the floaters, which will be used for the Elmed project?

[Paul de la Gueriviere, Chief Executive Officer]

So on the second question, it's not -- so we are not going to comment at this stage. We are quite close to the final investment decisions and more information will be provided at that time. on the exact industrial setup on this project. In terms of revenues, Yes, we expect a ramp-up in 2022. As we have mentioned, for example, before, we receive some royalty stream from the met project when the FID will be reached, and we would continue to generate engineering revenues on various projects. including projects under co-development in Japan, but also further engineering revenues linked to the OE projects and other projects currently under development with the Scott win award we also receive further revenues. So we expect a ramp up that is not going to be a drastic change it's the magnitude of the revenues we generate. So -- but it will ensure that we have a controlled cash burn over 2022.

[Operator]

And there no further questions, I'll hand it back to the speakers.

[Paul de la Gueriviere, Chief Executive Officer]

Yes. Thank you very much. We remain available for any further questions that you might have after over 2021, the company's first has been created, but transforming the legacy of more than 10 years of development of video, and we have demonstrated that we deliver on what we have provided and a strategic asset was to be awarded a start in Scotland, and we have been successful on the -- one of the most promising sites in Scotland. So giving us the possibility to leverage on this very first success to continue to continuing delivering the promise and what we have forecasted in the coming years. So very happy over the development of the company over the last month. Thank you very much.

[Operator]

Thank you. This concludes our conference call. Thank you all for attending. You may now disconnect your lines.