Eolus Aktiebolag (publ)

Welcome all to the presentation of Eolus Q1 report for 2024. Eolus is a developer of the renewable energy projects. We're active in seven countries. We've been in the business since 1990, so for more than three decades. We're growing rapidly. We're investing heavily in both project portfolio and in organization and people. We have more or less doubled both headcount and the project portfolio over the last 18 months. and sell renewable projects that we then construct on behalf of our customers. We also do technical and commercial asset management on behalf of our customers and have been entrusted by almost one gigawatt of operating assets to handle on their behalf. This is how the project portfolio has grown over the last four quarters and how it is split between technology and markets. You can see on the pie chart to the left that the offshore wind now amounts to 11 gigawatts and is the the largest technology in terms of megawatts followed by onshore wind and solar PV projects. But we also have a 10% share that is energy storage projects, mainly battery storage projects. Going forward we expect a lot of hybrid projects with combinations of these different technologies. We're active in Sweden, Finland, the Baltics, Poland, US and a small project in Spain. Sweden, US and Finland are the dominant markets where we're active. Turning to the Q1. The first quarter of the year was focused on the sales process and intensive work with department testing and commissioning of the remaining turbines in the 260 megawatt wind project Storhällsjön in Sweden. We did not complete any new sales transaction during the quarter and that is the main reason why we have a negative result for the quarter. EOL's earnings will vary between quarters and over the financial years mainly due to when we complete sales processes and how revenue recognition for ongoing construction projects are being recognized over time. We also have lower construction activities normally during the winter months. That's also a reason why we have a lower degree of completion during this quarter than what we had during the summer half of the year. We had a net sales of 44 million SEK for the quarter with a net profit of minus 32. That means an earnings per share of minus 1.30 SEK. The board has proposed a dividend of 2.25 SEK per share. which is a 50% increase compared to last year. The annual general meeting will be held tomorrow. The board has also proposed a share back program due to The business is well consolidated with a strong balance sheet. We have an equity to asset ratio of 54%. The project pipeline grow by almost 1.3 gigawatts during the quarter. That is mainly due to that we added a Swedish offshore project AURUM that qualified into the project portfolio. Meaning that we now have 28 gigawatts of projects in the portfolio in total. Main activity during the quarter was the investment decision and construction start of the three Swedish wind projects Foglås, Boab and Dollebo totaling 88 megawatts in the attractive price area 3 in southern Sweden. We started construction In the quarter we have entered into turbine supply agreement with Vestas and expect commercial operation to start for all three projects during the autumn of 2025. The turbines in the Foglås project are the tallest turbines we have constructed so far with a total tip height of almost 250 meters. It's a project with very good wind conditions located close to the lake of Vättern that will harvest very good wind resources in that location. We expect to complete the sales process during Q3. Besides the Storsjälsjön project we also have the American battery energy storage project POM under construction. It's a 100 megawatt standalone battery project in the San Diego area. It's the third standalone battery project that Eolus has developed and sold or constructed in the US. So we have gained a lot of experience from being in the market for quite some years now and we have a pipeline that is maturing very well I would say. For the POM project battery systems will be delivered by the end of June and we expect the significant contributions to the result for the coming quarters. COD means commercial operation is planned to around the year end 2024 and 2025. For this project we have entered into what's called a tolling agreement. It's a long-term 10-year agreement with an operator who pays more or less fixed amount per month and per kilowatt. fixed income for the investor which makes it really attractive as a cash yield investment for many partners. We expect to complete the project sales during the summer. Turning to Storsjösjön which is a 260 megawatt 42 turbine project in Sweden in the area of the Sundsvall. There all turbines are erected since before year end. All turbines have started producing electricity and 32 out of 42 turbines have passed the test run. But the project is not yet completed due to technical problems that the supplier of the turbines are facing. We expect those problems to be sorted out and that We can complete the project after the summer in Q3 and our assessment is that the delay will not have any significant impact on EURUSD margin from the project since we are covered by late delivery liquidated damages from the supplier and also from receiving the operating net from the electricity generation from the project. During the quarter we've also handed in the permit application for the Blekinge offshore project. A thousand megawatts offshore project in the southeast of Sweden. close to shore in shallow waters with a low cost of energy per megawatt hour produced. So it's in an attractive price area where we see the highest electricity prices in Sweden and with a huge need for a lot more power for the coming decades. The project is a redesigned project based on the former project that was rejected in 2016. Since then the project has been updated. The project area is significantly reduced, concerned from the armed forces that were expressed in the previous project process have been addressed as much as possible. The technical development of the turbines has led to that we can with this layout we can reduce the number of turbines with almost 90 percent compared to the initial layout that we did for 10-12 years ago. There's a lot of local support from local industry and from local politicians for this project and that is also demonstrated for instance in the way that the surrounding municipalities have agreed to to offer to the Navy an enlargement of the naval practice area, which is more than three times the size of the project area. We have also agreed with our former partner Simply Blue Group that EURES takes over the full ownership of the joint venture SeaSapphire that held a number of offshore wind projects with the floating technology. Their ownership stake has been transferred to Eolus in exchange for a future profit sharing mechanism. Our view on these projects with floating technology is that they are long-term projects. They have higher cost of energy than our near offshore projects. So we will develop this project at the pace that is in line with the technical development for floating offshore technology. This is an overview of the offshore portfolio that we have, where we have added the Aurum project in the north of Sweden, outside the municipality of Åbytvoss. So total portfolio now amounts to 11 gigawatts including products in Sweden, Finland and Latvia. For four of the projects we have submitted the permit applications and three of them are waiting for decision from the Swedish government and one is handed by the environmental court in Sweden. I would like to take the opportunity to highlight some of the upcoming mature projects starting with our P-NAVA project in Latvia. It's a 158 megawatt onshore wind project. When it will be constructed it will be the largest wind project in Latvia. We have received all the major permits. We have secured the grid connection and we expect construction to start in early 2025. commercial operation plan for 2027. We will initiate the sales process during the autumn. It's a project in farmland landscape. It will be built with tall hub heights and with large rotors with a high really high capacity factor so it's a really interesting project and a sizable project for a small country like Latvia. The Fog Awesome project is an example of one of our partnerships in total it's a 238 megawatt onshore wind project in Sweden in the municipality of Malung Sälen. It's developed jointly with our regional partner Dalarvind. Eolus holds 49% of the project and Dalarvind 51%. Here we expect construction to start during 2025 also with a commercial operation plan for 2027. Local partners intend to own part of the project, which is very good to increase local acceptance and local engagement for the project. We expect to do the sales transaction during 2025. I would also like to mention our next battery energy storage project in the US, which would be our third standalone battery project in the US. It's called Roca Secca. It's a 126 megawatt, 504 megawatt hour battery storage project. Designed for four hours duration. It's located in Nevada but just on the border to California. With a potential to be utilized to support the Californian power markets. We've secured the grid interconnection at attractive terms and conditions and we have been granted right-of-ways from the Bureau of Land Management that is administrating all federal land in the US. So we are performing final design and working with to obtain construction permits now. We expect to have this project in operation during 2026. During the quarter we launched long-term sustainability strategy targeting 2020-2040 for Eolus. The strategy includes three ambitious targets. When it comes to climate, the target is to have net zero greenhouse gas emissions from Eolus operations and our value chain by 2040. When it comes to biodiversity our target is to have a net positive impact by 2030. When it comes to community engagement we want to be the preferred renewable energy actor in local communities during 2030. You can read more about the strategy in our annual and sustainability report and of course also on our website. With that I want to hand over to Katarina to take over regarding the financial figures.

Thanks and hello everyone. Then we turn to the financial slides for the first quarter 2024 and I can start commenting again on the delays in Storfallskön and that handover to Hydro Regen and Meagre did not take place despite the hard work. Therefore, we just have a minor contribution of 3% of degree of completion in the quarter. The investment decision for Fogelås, Boab and Dollebo and start of constructions is on our own books and impacting both balance sheet and cash flow until the sales process is completed. And the same goes for the US battery storage project POM that is also under construction and the sales process is ongoing. We start with the net sales for the quarter was 44 million SEK and that's about 230 million SEK lower in comparison with the same period last year. And the net sales are low for the quarter. Most of the net sales is referring to revenues for the product handed over to customer before year end. Skalberg, Utterberg, Tjernes and Rosenskog. We received the final payment for the construction during the first quarter this year, and the payment was higher than estimated at year end, which contributed to net sales also in first quarter this year. We have also in parallel reduced reservations for expected cost. Overall, the products were on time and within budget after very well performed construction. There are two main reasons to fluctuations in both net sales and profit between quarters. One of the reasons is that we normally see lower activities in constructions during winter months in the Nordics since weather conditions limit the possible timing of construction activities. The other reason relates to the sales transaction. We don't do transactions every quarter since transactions are a large complex and therefore not always possible to predict and steer the timing of them. First quarter this year the technical problems with the turbine manufacturer in Storfallfön is the cause to the delays in completion and handover. Revenue recognition from Storfallfön based on the degree on completion for the quarter is included in the net sales which we present. In Storfallfön has a completion in total of 82%. We are focused to getting the project completed and expect the handover to take place after summer. And our assumptions are still that we have enough reservations in our budget for Storfallskön to secure that Aeolus margin will not be materially affected negatively by the delay. If we look at the expenses for Elvis Group, it's 15 million SEK higher compared to the same period last year. But in comparison with last quarter, 2023, the expenses are in the same range. And the higher expenses are following the business plan for expansion during 2022 to 2024. We had a negative operating profit for the quarter of 29 million SEK compared to negative 12 million SEK the comparing quarter last year. And for the first quarter this year, the operating profit has been affected negatively by 12 million SEK referring to market valuation of currency hedges. And the market valuation as of first quarter last year contributed with a positive amount of 21 million SEK. So excluding the market valuation, the operating profit was minus 17 million SEK for first quarter this year compared to minus 33 million SEK first quarter last year. Net from financial items for the quarter was close to zero as the amount also was last year. The net is mainly referring to interest for cash positions and interest cost for loans. The items have also been impacted by revaluation of positions in other currencies than SEK. Net profit for the period was minus 32 million SEK and has decreased by 17 million compared to same quarter 2023. Once again the market valuation of currency futures has impacted the result with minus 12 million SEK. Then we have the balance sheet. Total fixed assets amounts to 316 million SEK. The amount has increased compared to end quarter last year and that's due to the land agreement in the U.S. battery storage project POM and future payments according to conditions in the agreement. When we go to work in progress and product under development that was 1,373,000,000 and advanced payments to suppliers amounts to 306,000,000 SEK. And during the quarter, investments in the ongoing construction of POM have been made. Also, newly started constructions of Frågelås Boa Dollebro in Sweden have impacted the balance sheet item. Also, other investments in the project portfolio during the quarter has also contributed to increased work in progress compared to first quarter last year. We had cash of 725 million SEK end of March compared to 476 million SEK end of March 2023. If we go to the other side of the balance sheet, we have total equity of 1,601,000,000 SEK, where our equity of 70 million is related to minority stakeholders. Interest bearing liabilities 836 million SEK compared to 421 same period last year. The previous mentioned land lease agreement for POM is included in the long-term liabilities with 234 million SEK. When the project is sold the liabilities referring to the lease agreement will be removed. Total equity and liabilities amount to 2,958,000,000 SEK. Next slide we have the key figures for the quarter. Net sales for first quarter is divided into product development and the asset management. To start with product development, we had net sales of 36 million with an operating profit of minus 31 million SEK. And net sales for the asset management services is 8 million and operating profit of 2 million SEK. Earnings per share for the quarter is minus 1.36, but on 12-month rolling earnings per share, that is 22.31 SEK. Cash flow from operating activities during the quarter was plus 20 million SEK compared to minus 236 million SEK same quarter last year. And the main reason for the positive cash flow for the operating activities in comparison to first quarter last year is the received final payment for the wind farms handed over year end 2023. Equity per share about 61 SEK compared to 39 SEK end of March last year. Equity per share has been increasing significantly the last three quarters 2023 due to high profit. Due to capital tied up in products we had net debt of 112 million SEK. For the financial year 2023 the proposed dividend is 2.25 SEK per share and that's a total of 56 million SEK. The decision regarding the dividend will be made at the annual general meeting tomorrow in Hässleholm. I can also mention that the proposed dividend is 50% higher than last year. We have full-time employees at quarter end, 146 compared to 100 the year before. We will see a lower activity during 2024 compared to 2023 when it comes to recruitments. We have an order backlog of about 660 million SEK. It is lower compared to end March last year. and we expect the increase to increase the order backlog when the ongoing sale selling process are completed and we have asset management assignments of 939 million sec and signed agreements for coming 268 megawatt and still full fund is 260 megawatt out of that amount Equity to asset ratio of 54% and we have a solid platform that gives us flexibility and possibility to capture business opportunities that come our way. Return of equity after tax is 44% for 12 months rolling and that includes period of 1st of April 2023 until end of March 2024. And also worth mentioning that Aeolus net profit on rolling 12 months is 556 million SEK. The next slide shows projects under construction. And we have 456 megawatt under construction in March. Projects Dofell firm had a degree on completion of 3% during the first quarter and in total 82. and the remaining degree of completion will be accounted for during 2024. Fogelås, Boab and Dollebo have been included since start of constructions have taken place. And as you can see POM, Fogelås, Boab and Dollebo are not fulfilling the requirements for percentage of completion method as the product has not been sold yet. revenue recognition will start when agreements with customers are signed and when predefined construction milestones are achieved. Then I hand over to Per for the summary.

Thanks Katarina and to summarize we have the started construction of the Fogelåsbo up in Dollebo onshore wind projects in Sweden and we expect sales to be completed in Q3. The sales process for the POM use battery project is ongoing and estimated to be completed during the summer. Completion of Storholmsjön project is delayed due to the technical problems by the turbine supplier. and we expect final completion after the summer and we don't expect any significant effect on EURUS margin from this delay. Our offshore projects are developing well and in Q1 we handed in the permit application for Blekinge offshore so we have four projects where we have added in applications in Sweden where of three of them are now on the Swedish government's table for decision. We are planning for the next batch of projects to reach ready to build and transactions and among them as presented We have onshore wind projects in Sweden and the Baltics as well as another standalone battery project in the US. For the full overview of the late stage projects you can find that at our webpage. Conclusion is that there is a strong interest for investment in renewable energy in both Europe and the US. The mega trends of sustainability, electrification and geopolitical concerns creates a large demand for projects in all our markets to come.