Sbm Offshore Nv Ord

Ladies and gentlemen, thank you for holding and welcome to SBM Offshore Full Year 2021 Earnings Update. At this moment, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Just to remind you, this conference is being recorded. I would like to hand over the conference to Mr. Bruno Chabas. Go ahead, please.

Thank you very much, operator, and welcome to the SBM Offshore Full Year 2021 Earnings Update call. My name is Bruno Chabas, CEO of SBM Offshore, and I'm joined today by my management board, Philippe Baril, Eric Van Handijk, and Douglas Wood. I will present SBM Offshore's main achievements of 2021 and go through the general strategic update of the company, after which Douglas will talk to you through the financials. We will welcome your questions after the prepared section of this call. So as always, please note the disclaimer. And now let's go to the core of the presentation. And we're going to start by speaking about our business model. We, as SVM Offshore, are not in the energy business. We are in the energy transition business. We are playing a key role in the energy transition. First, through the decarbonization of fossil fuel production. Secondly, through the development of renewable energy solutions. Overall, through our experience, our knowledge of the oceans, and our strategy of optimize, transform, innovate, we are providing safe, sustainable, and affordable energy for generations to come. We play this role through our three-value platform, through which we bring values, solutions, and results to all our stakeholders. Starting with ocean infrastructure, based on our lead and operate portfolio, backed by our strong operational performance, combined with our capacity to reduce existing fleet emissions, and, of course, generating a healthy and predictable cash flow. the growth opportunity of our core business, which is supported by our transformation programs, Fast Forward and Emission Zeros. With these two programs, we address clients' needs for fast, reliable delivery with the lowest carbon footprint. Finally, the new energy business. where we leverage our offshore experience and technology leadership to bring competitive and innovative solutions to the renewables energy market, such as Flood4Winds, which I will tell you a bit more in a moment. This in combination with our digital services, which aim at increasing value throughout our product lifecycle by leveraging our operational data and digital technologies. Now let's turn to the highlight of the year. SVM Offshore, once again, delivered a strong performance despite the continued challenges brought by the pandemic. This success is directly linked to the talent, motivation, and dedication of all SVMers throughout the world. In 2021, we saw a strong delivery across the board. So to highlight a few examples of this. FPSO Liza Yunke is getting ready to deliver its first oil soon. We continue an excellent uptime of our fleet. Our guidance are delivered in line with expectations. And we got two major FPSO awards during the year. 2021 also saw SBM offshore breaking quite few company records. The lowest total recordable enduring frequency rate seen. Again, we should note that we will never take this safety for granted, and we will always remain careful and disciplined. Nevertheless, the performance of this year is quite remarkable. We have a record backlog of around $30 billion, which provides contracted cash flow visibility until 2050. We raised $4.8 billion of financing to support our growth. And our solid performance allows us to return a record-breaking $345 million in cash to our shareholders through dividends and shared repurchase. Third point regarding the energy transition. Our teams have achieved around 30% reduction in flaring over the last five years. or about 10% reduction in absolute emission compared year to last year. We will continue to focus on flaring performance and focus on further improvement going forward. SVM Offshore also commits to be the net zero emission by 2050, which includes COP 1, 2, and 3 for downstream lease assets. Finally, We're proud of the milestone reach in our floating offshore wind business, ensuring that the company is positioned well in this upcoming market. Again, an outstanding performance, which is a major compliment to the SBM offshore teams around the world. Now let's go over to the shareholder return. Our solid performance is translated in an industry-leading shareholder returns. Looking back, we now have created a track record of returning money to our shareholders, and we are looking to further build on this in the future. With a 13% increase year-on-year in dividend per share proposed to be paid in 2022, the company will book its sixth consecutive year of dividend increase, consistent with its stable and growing dividend policies. Over this period, in dividend alone, SEM Offshore has sustained a 30% confirmed annual growth rate in its dividend, which is remarkable, and certainly in our industry in particular during the period that we have lived. Including the 2022 dividend, the company returned around $1.4 billion since 2016. which represent more than half its market capitalization as of 2021 year end. So, before going into more detail in our value platform, I will cover our ESG performance. In 2021, we have aligned overall scoping of our emissions reporting to the Greenhouse Gas Protocol. This results in a reclassification of most of our emissions formally reported under Scope 1 to Scope 3. You can find the further details around this in our new report published today. This reclassification has not impacted SVN ambition with respect to emissions reduction. Therefore, today we report emissions from Scope 1 and Scope 3 which are close to zero thanks to the use of green energy in our site operation. Under Scope 3, the company reports the emissions from the FPSO operated on behalf of clients under the category downstream lease assets, as well as a new voluntary disclosure added this year under the category purchase goods and services to address emissions from the supply chain. As you can see, the vast majority of emissions is produced in our Scope 3 downstream lease asset, which is where SBM supports its clients to reduce their emission intensity. So you could question how we're gonna make this happen. First of all, deepwater oil field development compared to any other source of oil ranks among the best developments with the lowest carbon intensity. Secondly, our program of emission zero in place is aiming at reducing the FPSO emission and offer to the market a near zero emission FPSO. And lastly, on the existing fleet, we managed to achieve significant reduction in emission, for example, through better management of the gas system using digital technology and data analytics. We also have embedded sustainability in all our activities, and we are proud to see our efforts and performance recognized by third-party experts in their review of SBM Offshore's sustainability performance, as the company is identified as a leader and global industry mover. We also report annually on our sustainability-related KPIs at year-end. For the 10 ambitious targets for the year, for which all the details are available again in our annual report, seven of them have been met. For example, our safety performance and money spent in R&D on clean technology. We also have some work ahead of us on some indicators. One of the examples is the creation of a training center in Guyana. which received approval from all stakeholders at the end of 2021 and enabled us to catch up on this target in 2022. We continuously raised the bar by stepping up on our ASG target for 2022, where the company has now added long-term target toward 2030. In addition, We are expanding on sustainability focus and action on material topics such as human rights. We are also adding diversity and inclusion and circularity to the overall program. We're targeting to dedicate at least 50% of the 2022 R&D budget toward EU taxonomy eligible activities. The maturity gain over the years has allowed us to set clear targets at midterms and to meet the company's ambition to reach the net zero by 2050. So now let's go to the different value platforms of the company. We are currently operating 15 units for which our focus is on maintaining a solid track record in uptime for our clients. You can see here that for 2021, we are again above 99% at the end, despite the challenging environment and in line with our historical track record. This performance is reflected by the award we have received from one of our key clients, Petrobras, for the second year in a row about the best oil platform operation. We are also pleased to confirm the company received the six-year lease extension on FPSO Kike, the largest deepwater FPSO in Asia. So turning to the growing the core platform. As previously mentioned, we're going through a major growth phase with five projects under construction, following the award of two FPSO, Almirante Mandaré and Alexandre Guzmão. As with our operation activity, our project team are facing various challenges from the pandemic. but managed to maintain their focus on project delivery and safe execution. On FPSO Sepitiba, the modules fabricated in Brazil have arrived at the yard in China, and the topside modules fabrication in China is progressing. The project targets first soil in 2023. FPSO Prosperity is progressing as planned. The installation of the mooring system is ongoing, and the first topside modules are planned to be completed and lifted in the first quarter of this year. FPSO Almirante Amandare and FPSO Alexandre de Gosmao construction are progressing as per schedule. The sixth MPF hull has been allocated to the Yellowtail development project. Finally, I wanted to draw your attention to SPSO LISA Unity. Everything is on track to achieve first soil after our initial schedule. We're proud of this remarkable achievement for such a complex unit, especially during the COVID-19 crisis. This is the first FPSO under the fast-forward concept, Deliver, as well as the largest to be operated with the 220,000 barrels per day of production capacity. It is also the world's first FPSO with the SDG-linked class notation, Sustain 1. To the market now. With a capacity of two plus FPSO awarded per year, or about six FPSO at various stages of construction, the company will remain selective and disciplined in the positive FPSO market outlook. We identify around 25 potential awards until 2024. On each market of complex FPSOs with low carbon intensity, and low break-even prices remain the most attractive to our clients. Now, let's turn to the new energy value platform. And as I mentioned up front, we are in the energy transition business. So the company in this market segment, the company's strategy is to position itself in the renewable market and the floating offshore wind market, which is a fast-growing market. We are leveraging our experience and capacity in the floating offshore energy solution by investing in technology development, especially in floating offshore wind and wave energy. To enhance the positioning of the company's technology and to continue to stimulate the floating offshore wind market, LVM Offshore moved forward as a co-developer to accelerate the adoption of its technology. Our first development, LEAR, is located in the U.K. and comprising of two offshore sites of up to 200 megawatts each. CADEMO is another co-development project located in California for 60 megawatts. In the execution phase, the company is making good progress on the Provence Grand Large project with the construction of three floaters for a total 25 megawatts for EDF Renewal Labs. We're facing some execution challenges from the fact that we are fabricated for the first time on newly designed components in a COVID environment. These challenges actually bring some interesting learning points that have been integrated in our new version of our floater design and execution. We expect to continue our investment overall in pilot projects to ensure that our technology matures in line with the market dynamics. SVM Offshore is also looking to participate at the EPCI and technology supplier for clients involved in major farm developments, such as in Scotland, France, South Korea, and Japan. Finally, we are building strategic partnerships to support the development of our second generation offshore wind floater, which I would like to discuss next. Our floating technology solution, the tension leg platforms, offers our clients a solution with a high output and lower cost. This technology offers several benefits, but most notably it brings a lower environmental impact and a better layout substance. The capability to scale it to accommodate the largest wind turbine, which is important in order to bring the cost of electricity down. The ability to operate in deeper water and offshore environment to address all markets. Leveraging on this experience, the company is developing a second generation of floaters, which is what we call Float4Win. Offering a competitive solution, achieving lower costs for better and simpler design, which allow mass production and shorter execution. The blueprint under Flood for Winds is really the blueprint that we have been using under Fast Forward. Now let's turn to the market. The floating offshore wind market is developing worldwide, and the current market outlook of capacity to be sanctioned has grown during the year and is forecasted to further grow. The initial forecast now increased to between six to 16 gigawatts to be installed by 2030. With this growing market, the company has the ambition to become a top three floating technology provider. The company also has the ambition of at least two gigawatts of floating offshore wind installed or the construction by 2030. So that concludes the first part of the presentation. So over to Douglas for the financial, for SBM financial. Douglas.

Thank you, Bruno, and good morning, everybody. So the financials for 2021 reflect the strong business performance and the achievement of a number of records. With the two new orders received during the year, the order book approached $30 billion at year end. That's the highest on record and an almost 40% increase versus last year. The level of the order book reflects the growth phase that we're in, with five FPSOs in the construction phase, plus the early work on Yellowtail. Now to support this growth, we raised $4.8 billion of financing during the year, and that's the highest amount ever achieved by the company. And this shows the recognition and support for our strategy from our international syndicate of lenders. The size of the order book not only reflects the additional projects that we've won, but also the increasing size of the vessels required by our clients. Compared with the past, we're also retaining a larger ownership percentage in our portfolio of units under construction, and this is especially visible with the 100% owned Guyanese vessels. Our financing model is efficient in terms of minimizing the equity investment in percentage terms, but where obviously larger units require a higher absolute amount of equity to be invested during construction. Then in our drive to accelerate our renewables technology, as Bruno just mentioned, we'll continue our investment in pilot projects. And we have the flexibility to manage these investments for the long-term future without compromising our shareholder returns. We returned a record $343 million last year, and that represents a cash yield versus 2020 year-end market capitalization of 10%. And today we announced the proposed increase in the dividend per share by 13% to $1 per share. I will spend some more time on capital allocation returns in more detail in a moment, but first to review the key metrics for the year on a directional basis. Now, as you know, cash is king, and that's why the key metric to focus on for SPM is the level of the order book, also known as the backlog, and the long-term net cash flows that this will generate. So starting with this, the backlog was $29.5 billion at year end, largely thanks to the impact of the awards of FPSOs Almirante Tamandare and Alexandre Bezos-Mao. Over the next 30 years or so, the lease and operate backlog is expected to generate an aggregate net cash flow of around $8.5 billion, which, by the way, is approaching nearly three times our current market cap. Then net debt. This increased by $1.3 billion to $5.4 billion as we invest in the projects under construction. And non-recourse is the operative word when speaking about SDM and debt. The debt is directly linked to individual projects backed by firm contracts with premium clients and is non-recourse during the operating phase. So given this, it makes sense to look at debt relative to the size of the backlog of those contracts. And at the year end, the ratio was 18%, which remains in line with our historical range. Then to the P&L metrics, of course, also important as these allow for the monitoring of the delivery and realization of the backlog. Underlying revenue of around $2.3 billion and underlying EBITDA of around $930 million was stable compared with the prior period. Both these are in line with the guidance provided at the third quarter trading update. And just to note for underlying, this mainly reflects the add-back of the $75 million to revenue in EBITDA linked to the re-delivery of the DeepMoot platform. And you'll recall we adjusted the underlying 2020 revenue in EBITDA downward last year and added the same amount to 2021 based on the fact that the cash payment was a 2021 item. Now turning to cash flow on a directional basis. Cash from operations before working capital was pretty much sufficient to cover debt, interest, tax, and the dividend. Then on the investment side, you can see cash inflow from borrowings exceeded cash out towards investments. That's primarily driven by the fact that an aggregate $1.25 billion in bridge loans for the FPSOs Almirante, Tamandare, and Alexandre de Jusmal were fully drawn at year end, largely ahead of the planned expenditure curve for the projects. So we'll see those cash consumed during 2022. Then looking at liquidity at year-end, we had $3 billion. On top of the year-end cash balance, we had additional liquidity of $1.9 billion from the RCF, which was undrawn at the year-end, plus the undrawn portion of project debt. Moving to the details of the backlog and forecast net cash flow going forward, So again, the two new large awards were the main driver of the increase here by around 40% to $29.5 billion. In the backlog, we've included the 45% sell-down of equity in Almirante Tanandare, which was completed in January 2022, as well as a 45% sell-down in Alexandre de Jusmao, which is progressing with our partners and planned to close in 2022. So then you've got 55% of these projects in the lease and operate bar and the partial divestment to partners, the corresponding 45% share is in the turnkey component. At the yellow tail, only the initially agreed funding for the feed component, which includes securing the NPF hole, is incorporated as the project is still subject to government approvals and client final investment decisions. and a Guyana project continue to be reflected in line with original contract duration. So that's up to 10 years for destiny and up to two years for unity and prosperity with the contractual purchases for these reflected by the orange bars. So then looking at net cash to be generated with the two new awards on an after-tax basis, average expected net lease and operate cash flow has grown to $300 million per annum for the 29-year period. And this compares with $260 million average over 25 years at year end 2020. And here, we'd like to reemphasize that this cash flow is underpinned by contracts from premium clients supporting projects with very low operating break evens. We also updated here the discounted value per share of the net lease and operate cash flow plus currently assumed net cash from the sale of the BOT project in orange. As always, we're using the range of discount rates we observe being used by the financial community. And this value has grown to a range of 19 to 23 euros per share compared with 16 to 18 euros at year-end 2020. And so next, we'd like to update you on the various elements of our model for capital allocation and shareholder returns. First on net cash to look at the six-year model we've been using for several years now to assess the average in-hand cash flow for this period. Based on the updated backlog we just discussed, net cash from lease and operate after tax and debt service over this period is $365 million. So then we allocate the corporate overheads to lease and operate on the basis of an assumption of $75 million. and that leaves average net cash for the period of $290 million. Next, to consider the impact on the cash flow of turnkey, which is the growth engine of SPM, and where we've got various elements to think about. After covering the turnkey overheads, which include R&D, we need to consider the net equity investment required for the FPSO projects, which, as a reminder, is not included in the in-hand lease and operate net cash flow. Then we've got the investment in the renewables business mentioned earlier. So if we start with the FPSO net equity investment, we're financing the value of the FPSOs. And as such, we're able to debt finance a significant portion of the cost, minimizing the cash equity percentage requirement. However, larger units obviously require a bit more equity in absolute terms. Previously, we've talked about a rough range of $1 to $1.5 billion for FPSOs. Now, with the newer projects, it's more $1.5 to $2 billion, and then the net equity requirement depends on share of ownership, gearing, and project execution performance. It's important to mention that larger FPSOs bring larger backlog, so more cash down the line, and we consistently achieve attractive double-digit returns on FPSO project equity investment, which remains the expectation for all the current projects under construction. Next on investment to grow our renewables business. So in August, we mentioned that we've allocated an amount of up to $200 million in our forward planning to support our co-developer ambition. This amount is assumed to be covered by a working capital facility where we'd expect our aggregate investment to be recovered as a minimum as successful projects are sold down. So cash flow neutral overall. And to this end, we've structured, together with our RCF banks, a dedicated $50 million green tranche in our RCF. This only represents a first step where we're looking at seeking to extend this capacity over and above the current RCF capacity in line with our funding requirements going forward. In addition to this, we currently expect to invest in the region of $150 million on renewables pilot projects over the next three years or so, to ensure our technology evolves at the requisite pace to capture a sizable share of this increasingly promising opportunity set. And by the way, this flows through the P&L in turnkey. But to conclude then on the impact of turnkey in the cash flow equation, considering these growth elements, on average over the six-year period, turnkey will require some incremental investment over and above the cash to be generated from the current turnkey portion of the backlog also including the cash proceeds from the BOT sales. Finally, the last element of the model here, equity cash flow acceleration, can mitigate the impacts from this incremental investment phase on the overall cash flow equation. Now, this acceleration can take the form of further equity sell-down plus equity cash flow acceleration from project refinancings. We completed our first such refinancing with the FPSO Ilabella last year, and as stated before, we're actively assessing additional candidates for bond refinancing so that bank debt can be recycled and net cash accelerated. We also announced today the planned divestment of a 13.5% equity ownership in FBSO Sepitiva, the China merchant's financial leasing company. Then turning to how these updates on the capital allocation model translate to shareholder returns. Driven by the increase in the backlog and net cash in lease and operate, we're proposing to increase the dividend by 13% on a per share basis to $1 per share, which is around $180 million in aggregate. Helped by the benefit of the €150 million buyback completed last year, this represents a yield of 7% versus year-end 2021 market cap. And as you can see from the chart on the left, since the restart of the dividend in 2016, we've delivered a compound annual dividend growth of 30%. Since we started making a linkage between the dividend and the six-year average in-hand lease and operate cash flow after corporate overheads from 2019, over the past three years, we've paid out more than 60% of this cash flow, and the proposed increase in dividend is in line with this. Then throughout the period shown in the chart on the right, continuous per share dividend growth has been enhanced by the buybacks. The use of buybacks also has the advantage of allowing flexibility to manage the cash flow around incremental investment in growth through Turkey, along with the execution of equity acceleration transactions. And looking at the overall impact of the buybacks in recent years, these have enabled us to deliver a cash flow yield of around 10%, which is pretty competitive. And we have the ambition to maintain this in the future. but of course subject to growth investment requirements and our ability to deliver further equity cash flow acceleration. Already fair with the dividend alone, we'll continue to deliver a very healthy cash yield. So as you heard from Bruno, we're operationalizing our vision of an energy transition company, where as well as delivering growth in the future, this also means delivering cash returns today. And we're not going to let our optimism get ahead of us, But as there are some signs of a realization that there may be some value in traditional companies that are generating cash, we're hopeful that we might get some more recognition from this. That's it for me. Now back to Bruno for the outlook.

Thank you, Douglas. And let's go to the outlook and the conclusion to this prepared section of the call. So our guidance for 2022, we're looking at the 2022 directional revenue guidance as above $3.1 billion, which is around $1.6 billion for the lease and operate activity and above $1.5 billion for the turnkey activity. Our 2022 EBDA guidance is around $900 million, in effect, the same guidance as last year. This EBDA guidance includes foreseen effects of COVID and the associated cause for mitigating impacts in project execution and additional cause to manage COVID prevention in our fleet, combined with some additional maintenance which have been pushed into 2022. So, in conclusion, we see leading experience. and predictable long-term cash flow, SBM offshore is at the forefront of the energy transition. Again, we're not in the energy business. We are in the energy transition business. And it is not just about switching to renewables. It starts with lowering the impact of fossil fuel, while at the same time developing new means to replace them. At SBM Offshore, we put our marine expertise and oil and gas experience at the service of the responsible future. So again, thank you for your attention. And the floor is now yours for your questions. Operator. Hello. Hello.

Thank you, sir. Ladies and gentlemen, we'll start the question and answer session now. To be registered for the question and answer queue, please press star one. If you have a question, please press star one. Go ahead, please. And the first question is coming from Mr. Curijn Mulder, ING. Please go ahead. Your line is open now.

Good morning, everyone. Can you hear me?

Yes, we can.

Okay. I have a couple of questions. My first question is about your ambitions for 2030 with regard to 25% of revenues coming from new energy and gas. So what about the situation with regard to gas? So maybe you can say something about that situation there. And the second question is, regarding your outlook, 900 million EBITDA in line with what do you think is the impact of COVID-19 in principle with somewhat delays here and there, somewhat extra costs? Is that completely offsetting the positive contribution from the second quarter of leisure unity in terms of EBITDA? Is that what you are now saying to us? That's one of my questions.

Okay. Thank you very much. So Douglas is going to go through more of the detail of the outlook, but let me first take the ambition for 2030 with regard to floating offshore wind. The strategy of SBM Offshore has been over the past few years to be extremely focused on targeting some market segments. We have done that in the FPSO market by being specialized into one niche market and ready to develop a technology, which is in advance of anybody else, and to be the leader in this technology and basically to be able to make money. We are looking at doing the same in the new energy business. And as such, we have identified the floating offshore wind market, which combines the both high growth in the market and which combines the strength that SBMF short-term brings to this market and for us to be able to take a leading position. Now, we're looking also at other markets around, but we don't want to spend too much time in basically trying to diversify the company in too many angles. But when we look at the gas side, what we have said is on the gas side, we're going to be focusing much more on what is the possibility to do carbon capture, and in particular, carbon reinjection, rather than producing gas or to go into areas like protein LNG, where we believe that the market is not there, it's not established, and it would be rather difficult for a company like us to make money. So our focus really on the new energy business is going to be on the floating offshore wind market, again, using the same principle that we have been using on the FPSO market. And through the development of the Flood for Wind concept, it shows you the trend that we're taking there. Douglas, you want to go through the outlook?

Yeah, so on the outlook of the guidance, so what I'd say is, as ever, we take a disciplined approach when setting the guidance. Considering the risks and opportunities that we see for the period looking ahead, I note we're at the start of the year and same as the recent years, we've obviously got the backdrop of COVID, the pandemic to consider. And so really based on the visibility that we've got, we feel this is a reasonable place to start and we're going to keep you posted for as the year evolves. Thank you.

And the next question is coming from someone, Mr. Mulder from Kepler Chauffeur. One moment, please.

Yeah, good morning. A question on your new energies. It shows on sheet three that the wave energy converter is missing. Can you make any comment on that? Secondly, on the cash flow picture, the 300 million average through 2050 is the same as what you said before. Still, you now see a value of 21 euros per share compared to 19. So can you comment on those two?

Okay, so Douglas will take the cash flow picture. With regard to the wave energy, we didn't highlight any particular point at this stage simply because we are in a way we're progressing the project and we're making progress, but really there is no main highlight. The main progress we have made during the year are really associated with the flow the floating offshore wind market and the technology associated to that. So that's why we wanted to highlight those points. The rest, which is ongoing, is ongoing, and we didn't have any particular highlight to give. Agathe?

Yeah. So just on your question on the net cash and our calculation of the price, I think the key element to mention there is there you're really seeing the benefit of the buyback. So that's a factor there, and then there are also some elements around FX.

Okay, thank you.

And the next question is coming from Mick Picker-Berkeley. Please go ahead. Good morning, all.

A couple of questions. I think you said Sepitiba is now a 23 startup. I think that was 22. So we just talk about exactly how much later it's going to be. And if there are issues elsewhere, any other units you're thinking are a touch later, obviously problems within the system globally. And then secondly, on the floating wind, now talking of a second gen TLP, we've spent quite a few years talking about the first gen. So can you just talk about the differences between gen two and gen one?

Yeah. So I would take the second question first, and Philippe will go through the first question on the overall project portfolio and also with highlights on Cepetiba. But let me speak about the Flood for Wind concept. The initial phase of development in the floating offshore wind was really basically to debug the system, to learn from it, and security, I would say, was the basis of developing the concept. Now, at the end of the day, if you want this market to develop, you need to have a concept which are going to be fast to build, which are going to be efficient, which are going to be linked to the supply chain which exists in the world and standardized. Basically, exactly the same approach that the approach we have been using for Fast Forward. So, as such, over the past three years, because it's not a concept which just came from the drawing board over the last year, from the past three years, we have looked at ways to optimize the first concept that we developed in order to become more competitive, to become more efficient, and yet to take the risk away when we're going to do the installation. Now, Doug has mentioned that over the coming few years, we're planning to spend around $150 million in the development of those technologies. All of this is flowing through a P&L, so I just want to highlight this fact, that nothing is shown in the balance sheet and that we're taking all the development costs through our P&L, but we believe that we're really through the first version of the system. and the second version of the system, we're creating a value for the company going forward, which is second to none and really to be extremely competitive. And this brings the confidence that we have in saying that we want to be one of the major, one of the leaders in providing technology and APC capacity to the floating offshore wind market in a de-risk environment, because you can be a leader and losing a lot of money, but that's not what we're aiming at. We're planning to do this in a de-risk environment and really making money in this market. Philippe? Yes, Mick, let me start by first the portfolio to confirm that at that stage we see the portfolio as healthy and there's no change there. But now coming back on safety by your right, that last time we flagged this project and indicating that somehow there was a COVID impact and some mitigation being implemented. Having said that, there's no change to the delivery date of 2023. We still see it the same way. We were providing, because we were entering construction and commissioning phases, a number of details. What now we are updating is that all the fabrication that had to be done in Brazil is now delivered in China. When we're talking COVID, even a module requires COVID quarantine. So those are the things as well that are potentially impacting us. Coming out to the fabrication in China, we somehow have decided to extend the construction phase during the Chinese New Year in order to have modules that have a higher degree of completion before we are in the commissioning phase. On the commissioning phase, we had indicated somehow that the electrical modules and power generation were involved. I'd like to update you and tell you that the commissioning is progressing as per plan. So, again, a portfolio overall which is in line with our expectation. Obviously, we need to mitigate the COVID impact. It has some effect more on some projects than others, but overall, really pleased with the performance and what's happening today, as is shown under LizaUnity. I mean, LizaUnity is really, we're looking at first oil in the near future, and that's in line with the original plan, which is pretty remarkable.

And while I've got you, can I just ask about your emissions? You talked about re-classifying some of your emissions. Can you just talk exactly about it? Yeah. I know you mentioned it, but I'm not that alert.

So it's early morning for you, and apologies for that. Now, what we have done is basically looking at the emission and to make sure that the reporting of our emission is in line with the greenhouse gas emission protocol. And as such, the emission from our asset really should be classified under scope three, which is what we have done. Those emissions are classified under scope one for our clients. Now, this reclassification, which really reflect, give a better reflection of what a company is doing for scope one, scope two, and scope three, does not change at all the focus that we have in order to reduce the overall emission of a company, including scope three. And the emission zero program is really in line with this target in order to help our clients reach net zero emission target most of the time by 2050, and that's also what we're aiming at doing.

Thanks, Brian.

And the next question is coming from Mr. Thijs Bercouder, ABN AMRO. Please go ahead, sir.

Good morning. Do you hear me? Yes, we can hear you loud and well.

Very good. First question, because I still don't think we really have an answer on Brian's question. The unity is to be delivered, let's say, any moment now, more or less, will contribute to profitability in 2022. So, should we conclude that the extra contribution, more or less, is completely eaten away by started costs for floating wind and or, let's say, additional COVID costs on the ones we already have?

Okay, so that's a question on the outlook. Douglas, do you want to go through more details?

Sure. I mean, look, it's an overall view. As I said, it's based on the visibility that we see at the moment, and so it's a reasonable starting point. I think specifically you asked some questions on lease and operate, I mean, things to bear in mind. Yeah, we've got Unity coming in, but we also have Deep Panook effectively out, so we added that back this year, so that's not there next year. Then we've got Capishava, which is assumed to be out, and Serpentina. Yeah, but maybe more specifically, just to understand the split between, let's say, Yeah, what is old legacy business? Let's say your legacy business and your renewable business, what has been the pressure of startup costs coming from renewable energy, let's say, in 2021, and what can we expect there for 2022 and maybe also for 2023? When can we expect it to gradually fade away?

I mean, we're not providing detail on the different segments of the turnkey activity. But suffice to say, as Douglas is mentioning, that we're looking at some healthy investment into the renewable business. Again, those investments are flowing through the P&L rather than through the balance sheet, while we're creating significant value in our view to go forward. So that's, in effect, impacting the EBITDA guidance for certain. And that's one point to take into consideration. Maybe another point to take into consideration is, as you know, under directional reporting for assets which are in full, good performance, which is there, is not shown into the P&L. So at the end of the day, when you look at the COVID effect, when you look at some of the delays that we have spoken on maintenance and a number of things, that's the guidance we're coming to. which all in all, given where we are and the state of the industry and the performance of companies, is pretty good guidance.

Yeah. Okay. Can you then maybe give a comment on inflation effects in your supply chain and how you are able right now to pass these inflation effects through to your clients?

So, I mean, inflation, I believe we spoke about this in the previous call, but what we have seen is basically over the past 18 months an increase in costs of roughly in the range of 30%. But more importantly than the increase in costs is really the effect on the planning. We can see that there is a lot of bottleneck in the supply chain, a lot of elements which are not going to be delivered on time. So the importance to be able to mitigate the planning effect is there. Now, with regard to our project, what we do when we submit an offer is really we take the information that we have and we try to mitigate as much as we can the effect of inflation. And by and large, that has been done. Now, during the execution phase, what is important is really to rely on the number of key suppliers in order to be able to deliver. And I would say the policy of the company to have a strong relationship with some key supplier is helping us during this phase. At the end of the day, when you put everything into consideration, I would say that the investment done under fast-forward on the concept of standardization, working with some key suppliers, and mitigating the risk is being shown in the performance of the company. But the cost of FPSO is increasing in line with the inflation which exists, and that's the reality of the world today. By the same token, the price of oil is increasing also significantly.

Yeah, I fully agree there. Just needed clear statements. Then for Douglas, you're not announcing a new share buyback right now, similar to last year for your results. Is there a good chance that you will come back to the market this year with a buyback? Yeah, I would say, Thijs, that as you saw in the presentation, the capital allocation model approach on shareholder return, there's absolutely no change to that. The basis, the dividend policy is stable going over time. We just put the dividend up 13%, or proposing to put the dividend up 13%. And as ever, we're very disciplined on how we manage the cash flow. So, yeah, for sure, we've got to make some investments, a bit more draw from the larger FPSOs. But, you know, as I mentioned, that's going to give us more cash down the line. We've got the ability to manage that with equity cash flow acceleration and so to free up some cash flow for additional returns. And as I mentioned, certainly we've got the ambition to increase our cash yield above the dividend one. But, you know, as always, it's been the case when we're thinking about all of this, we're looking carefully at the overall equation of the cash outlook, the investments that we need to make, plus the impact of any money we've actually got in from acceleration activity. So, yeah, it's pretty much the same approach. Okay. There's a final question for Bruno on floating winds. The ambition to be top three supplier by 2030, and that's with only two gigawatts project. Looking at Scott winds, I would say two gigawatts is too low to make it top three. Can you on Scott winds? Maybe are you actually in talks on really supplying floaters for Scottwind projects, or is it primarily talks on the mooring systems?

So a few aspects. When you look at Scottwind, what you speak about, if I'm not mistaken, 15 gigawatts, it's not 15 gigawatts installed by 2030. So when we speak about 2 gigawatts, we're speaking about 2 gigawatts installed by 2030, which is in line with the market expectation that we're seeing of anywhere between 6 to 16 gigawatts. But we're more of the opinion that it's going to be on the low range than the high range at this stage, simply because of the time it takes for the market to materialize. Now, I mentioned also that we're involved as a turnkey supplier of the system in all the major markets in the world which are active today, including Scotland, Japan, France, and the U.S. So that's also in line with being present there. We're not going to be present under ScotWin as a developer. Our ambition is not to be a developer. We don't want to compete with our clients. That's not the aim of what we're doing. We want to accelerate the acceptability of the floating offshore system, and as such, we're taking some small participation as a developer, but our aim is not to compete with our clients. We're the developer.

Okay, clear. Thanks.

Ladies and gentlemen, if there are any additional questions or remarks, please press star one. Go ahead, please. And there's a follow-up question coming from Mr. Andre Mulder. Kepler Chauffeur, please go ahead.

Hi. Yeah, in fact, a couple of questions. First, on turnkey, you see a doubling of sales in this year. I think the delayed sale of the Almonte steak is, of course, a part of that. But could you give us a bit more insight in the doubling of turnkey? Secondly, that I understood as well that the capybara is now definitely out after July. I think the serpentina effect will likely be very small. Any news on the mondo? It's at the end of this year, but maybe some further insight there. Then two other questions, a question on the tax level. We see this global drive to sort of punish companies with a standard tax rate. Does that have any impact on your operations? And last, can you give us a bit more detail for first oil for the floaters that you have on the construction for modeling purposes for some you're more detailed for Unity's Q1 for Omri Antetandre, it's the second half, but what about Sepitiba, what about the Prosperity and the Alexandre de Guzman?

Okay, so Douglas, I'm looking, are you eager to answer all those questions?

I'm ready to.

I'm sure you can.

Thank you. All right, so Turkey, I mean, very much, we're in the growth phase, so now you're going to see the revenue coming through. So, yes, Commander Ray is included. And as I mentioned, we are also assuming the sell-down of the Alexandre Husmail. So, that is a meaningful component in the turnkey revenue guidance. So, there's no option extension for Kathy Shabba. As you mentioned, Serpentina is a small impact. And Mondo, no news on that. We'll keep you posted. Tax-wise, you're talking about Globe. So the model rules were published really right at the end of December. And in order for us to assess what the impact will be, if any, next we need to see the OECD commentary on how to actually interpret those rules, and then we've got to see how the adoption process goes in the EU. So we're monitoring that, but we need to see the further details. I think you then asked about the start-up date, and those are the dates that we have are clear in the press release in terms of the anticipated dates. completion of all the projects. So that's what we're able to say about those.

But can you give a bit more detail for SuperTIBA? Will it be the first half of 23 or the second half?

Those are the dates of the, that's what we're able to say.

Okay, thanks.

Thank you.

And the next follow-up question is coming from Mr. Kurain-Milder, ING. Please go ahead.

Yeah, Kurain again. On the BOT contracts, we are now, I think, with a discussion for more than two years now on with Exxon on the BOT contracts, I think. Is there anything you can tell us about it? Because the oil price is now at levels that the cash flow is coming in massively for these oil companies. Do you have any news? And then on the partnership from a Chinese lease company, 13.5% they take in Sepetiba. What is the next step for these guys? Are they also maybe stepping into the big floaters for Bousios? Is that maybe a consideration? But I think you have already 45%, so maybe there's a limited divestment there. as you would like to have a majority in these floaters, I think. And then my last question is about Cidade da Anjeta. Is there anything new you can tell us about the leakage of the oil, which you mentioned in your press release?

Okay, so I propose, Philippe, to give you an update on CIDAD, the Ancieta, and those elements. And Douglas, you will take the two other questions. Yep. So let's start with you, Philippe. Yep. Karim, thank you. Let me start by saying the fleet is in excellent condition. The maintenance is a priority. And we are applying the highest international standard. Our clients appreciate it. They expect it, and they recognize it. Now on CDA, we have to record a hull-related event. SBM hull expansion programs are based on year of experience with classification society, naval and marine experts. I would start to stress the effectiveness of the anti-pollution measures. The situation is under control. There's no further oil around the FPSO. We have implemented a temporary repair, and we will move to permanent repair shortly. material resource procedures that are identified. The dialogue is active with the customer, the authorities, and the classification society on the following action plan before we restart. While we are diligent on establishing and implementing the action plan, we will continue to prioritize present operatorship, aiming at no subsequent event. Thank you, Philippe.

Then the other two questions, so the BOTs, we're not expecting any changes to the contracts that we have. So Destiny, it's a 10-year contract, but with an option to buy early. We've got it in the backlog at 10 years for now. And then on the other two projects, those are two-year BOTs. and that's how we reflected them. We don't have any update on precisely when the options may be executed, so it just makes sense to have them in the backlog per the contract. So there are no discussions with Exxon on this subject compared to last year, for example, or to 2020? Yeah, no, there's no specific discussions on those matters. Then on the plan sell-down to China Merchant Financial Leasing, so really the focus on that is getting the approvals from the various parties to bring them in to the deal. I think it's a very encouraging step. It's great to have a new partner, and once we've concluded the deal on SEPA-T, but We'll look to see how we can build on the partnership going forward. Okay. But it is logical that you, let me say for the KUSMAO and certainly for Tamandere, that's too small a participation to otherwise to lose your majority in the FB cells. So I think, you know, with those projects, that's where we are. For now, there's no plans at present to change that. But, again, I'm going back to the whole discussion around capital allocation. We obviously have various options, tools in our toolbox relative to equity, cash flow, et cetera. So, yep, I'm never going to rule out further sell-downs on any project. But then we also have the ability – to accelerate cash flow from the bond refinancing. So we've got all of the tools that we need there. Thank you.

And the last question is coming from Mr. Mick Picker-Barclays. Please go ahead, sir.

Just a quick follow-up. I think Doug was taught to average new units being in that 1.5 to 2 billion range versus 1 to 1.5. And then, Bruno, you mentioned average price inflation has been about 30%. Given that units are getting bigger, shouldn't actually the range of new units be a touch higher than that 2 billion these days?

Maybe the one which are going to be quoted later on. Again, the pricing environment is moving and has been moving quite a lot. We have been able to lock in some prices. at a level which were below the 30% increase for some part of components. So the new unit that we have in portfolio do not reflect fully the 30% increase that I mentioned about. But if we were to quote a project today, it would be a 30% increase compared to 18 months ago. So would it be above 2 billion? That would be potentially the case. But I would not want to commit to that or to be absolutely affirmative because you need to have already a tender on the go in order to say that. But your point is well made. Then there is a possibility that the new unit would be above that.

And can you just talk about competitive environment? Obviously, your major competitor is having quite serious financial difficulties. So what are the conversations like with your clients today about competitive environment?

I mean, what we can see is our focus as a company has always been to focus on the value we can deliver to our clients. And that was the principle behind Fast Forward, to be able to accelerate new oil to our clients and to deliver value to them, and as such, to be in position to be able to negotiate and to be the preferred partner with our clients. That's what we have done, I would say, with our two main clients, Petrobras and Exxon. I believe the way we're delivering is really reinforcing our competitive position. Time will tell how things are going to be evolving. But at the end of the day, rather than the competitive environment, it's the value that we can bring to our clients, which really brings our clients and the tight working relationship we have with them. And that's one point. The second point is also, and we have said this for the past few years, and we're reinforcing this message there, we're going to be disciplined. What I mean by that is even if good opportunity were to arise at present, if we don't have the capacity internally from an execution standpoint or from a financing standpoint or whatever else, we're not going to overextend ourselves. the priority is really to perform, to perform in line with the expectation for our clients and to deliver. So as such, I would say the competitive environment is whatever it is. The more important point is to provide value to our clients. And as such, we will remain disciplined and we will focus on accelerating the value added we bring to them.

Thank you.

Thank you, Mick. I believe there is no further question. As such, thank you very much, all of you, for your attention. And you can now all resume a normal activity. Have a good day.

Ladies and gentlemen, thank you for attending. This concludes the SBM Offshore event call. You may now disconnect your line. Have a nice day.