Eolus Aktiebolag (publ)

A warm welcome to this presentation of EOLU's results for the first quarter 2025. Your presenters today will be myself, David Torsson, CEO, and Katarina Persson, CFO. Aeolus is a leading pure play developer shaping the future of renewable energy. We're positioned to take advantage of the structural growth in the renewable electricity demand resulting from worldwide electrification and decarbonization. We apply our core asset light business model to create value efficiently in every step of developing our diversified portfolio of onshore and offshore wind, solar and battery energy storage projects across six markets and a portfolio of 25 gigawatts. Major energy investors trust our 35 years of proven experience executing and optimizing market leading energy assets. I will begin with a walkthrough of the Q1 highlights and give an update on our portfolio, including some news on external reporting. Katarina will follow with a close look at the financials and I will then conclude the presentation with our view on the near-term outlook before we move to Q&A. We achieved 164 million SEK operating profit, mostly due to the sale of our 100 megawatt best project in home, California, where we have so far recognized 75% of the expected profits based on the construction completion method. So we have still 25% remaining from that project. Together with our partner Hydro Regn, we also formally handed over the Swedish onshore wind project Storskillsjön to our customers Meag and Hydro. It's a project of 42 wind turbines in the municipalities of Sundsvall and Timbo. and thereby transferring 260 megawatts from our development portfolio to our asset management portfolio. So for the first time EURUS now manage more than one gigawatt of assets on behalf of our customers. The first quarter 2025 was a strong start for us in a turbulent context. So if we look at what we call value realization, our Value realization was strong with 275 million SEK collected from the sale of the home and where we expect an additional payment in the range between 25 to 30 and a half million US dollars by commercial operation. The final payment amount depends on certain performance conditions and the project was divested at 75% degree of completion and the remaining 25% is then expected to be completed with revenue recognition during Q2. And I know that some may have expected 100% revenue recognition already in Q1. The transaction meant that all liabilities and assets connected to the project left our balance sheet. substantially reducing our net debt and working capital and increasing the equity to asset ratio and our order backlog. As part of the transaction and completion of the project, we acquired all future guarantees of origin from the project at the fixed price. We have then resolved those rights at a good margin. where we expect 100 million SEK of revenues and 100 million SEK of the cash flow over the coming 10 years. So that means roughly 2.5 million SEK expected in revenues and also in cash flow without any costs for each quarter during the coming 10 years. If we turn to the strategic review of the offshore wind, That came to an end during the first quarter. We have concluded that there is currently little commercial viability in offshore wind in the Swedish and Finnish markets. We have therefore taken measures to reduce staffing and to minimize product development expenditures going forward. There is no question that offshore wind is needed to achieve the ambitious plans of national politicians and to reach climate goals. electrification of the energy-intensive industry and the market needs to return. But that would require more certainty in electricity demand growth and credible policy support. Of course, Uncertainty has rocked the macro environment for all sectors due to the trade policy changes and renewable energy is not an exception. But EURES has little direct exposure to tariffs because our suppliers have a large degree of local or regional manufacturing. And those suppliers do import components and materials from abroad and tariffs will likely affect their pricing. We work to ensure that the risk of the tariff driven price changes are isolated and managed in our contracts with both suppliers and customers. And we need to be able to pass on such risks further down the value chain. We also announced a potential bond issue after the quarter closed due to the subsequent macroeconomic turbulence. The bond market activity decreased across the board during April. We see positive trends in the market and we continue to monitor the market and the alternatives together with our financial advisor DNB. Because of the increase in the short-term uncertainty, the board decided to propose that the payment of dividend for 2024 to be divided into two installments with the 0.75 sec paid out in May and 1.25 sec paid out in November. And the purpose of this change was to expand our headroom for maneuver in the short term if conditions would have become worse than expected in beginning of April. Our progress in the value creation pipeline was steady in the first quarter. We have almost 1.5 gigawatt of value in mature projects that we aim to realize over the coming three years. Fogloss, Dollebo and Boab construction proceeded according to plan. installation of the turbines are ongoing in all the three projects. And we have made substantial progress on securing a PPA for the projects. A PPA would lock in long-term revenues and strengthen the commercial attractiveness of the projects. And imperil negotiations with potential project buyers are ongoing. Our Latvian project Pinova is attracting interest and negotiations with the potential customers are ongoing and we're also seeking a PPA in parallel for that project. Fageråsen, which is one of our larger projects in Sweden, is a joint venture with the local partner Dalarvind. We are in the transaction market with that project and we are seeing solid commercial interest and are making progress with potential buyers there. Mabek, a Swedish onshore wind project with a potential hybrid component achieved an unimportant value creating milestone with a positive environmental permit decision in first instance during the quarter. And this is an extremely good project from a wind resource perspective. We continue to develop our investor communications to increase transparency and understanding of our business. And close watchers may have already picked up on the latest change to project portfolio reporting. We have now split the phase early development into early and mid development. So the structure aligns better with how we track value creation internally. And a project in mid-phase is of course worth more than it is in early phase. And the update can be seen on this slide, where you can see that we have 20.2 gigawatt in early phase, 3.3 gigawatt in mid-phase and 1.8 in late phases. And note also here that Poland and US, two key markets, make up an increasingly larger share of our mid-phase portfolio. And this is in line with our growth positioning and long-term view of market development. Another piece of news in our communication is that we are making available more granular project portfolio data. You can now find an Excel spreadsheet comprising the full development portfolio in megawatts, split across price area, technology and maturity. And this data will be updated and shared quarterly. I'll wrap up this section with a look at the progress toward our financial goals for 2025 to 2027. Our first quarter of the business plan puts us slightly ahead of our EBIT target. Return on equity for the quarter is at 17%, so we're above the 15% target. And our equity to asset ratio is substantially above the 30% target and is at 61%. I'll now hand over to our CFO, Catharina Persson, for a walkthrough of the quarter's financial figures. Okay.

sorry for the delay um thank you and hi everyone joining the call today our net sales for q1 amounted to 1 billion 975 million sec yielding an operating profit of 164 million sec and earnings per share of 3.60 sec at the close of the quarter our equity asset ratio stood at 61 percent And all key figures are significantly above the first quarter 2024. And I will now go into why that can be the case. As a pure play developer, our revenues derive mainly from large project sales. This means key reporting figures can be lumpy and vary widely between reporting periods. EBIT will rise considerably in the quarter of divestment and construction management revenue recognition, especially for a product that has started construction like POM. We capitalize product cost on our balance sheet under products under development, products under construction and advance payment to suppliers. And product topics for equipment and construction services increase working capital significantly when we build on our own books. Working capital will then significantly reverse when we divest the product with a high capitalized CAPEX like POM. Our net debt position is similarly affected. It increases with product cash outflow and use of construction credits in products that are under construction, and then decreases as the product construction credit is either amortized using sales proceeds or transferred to a new owner when the product is divested, like POM. This slide shows change in operating profit compared to Q4 2024. This is mostly a story of impact of POM with a large increase in revenue and a corresponding large increase in cost as capitalized costs are recognized on the income statement. Also, the completion of Storfallfond has contributed to the revenue. Other external costs decreased somewhat, while costs for employees increased due to one-off redundancy costs as we right-sized the Swedish and Finnish organization. Operating profit amounted to 164 million SEK for the quarter. And also note the effect of late-stage product sales like POM on our margin. And a product that is sold before construction start could yield the same operating profit, but with significantly lower revenue and capitalized cost affecting the income statement. Opening cash balance for the quarter was 356 million SEK, and closing cash balance was 200 million. Positive contribution, mainly from home payment, but also recurring asset management fees. There was also a substantially negative cash flow contribution under change to working capital from payments related to ongoing constructions of the onshore products, Vogelos, Dollebo and Boab. And the remaining POM revenue of 25% is expected to be progressively recognized until completion and has been added to the order backlog, which amounted to 750 million SEK in total at close of the quarter. Negative cash flow resulting from transfer of product debt financing for POM to the buyer and the cash flow effect is equivalent to full amortization recorded under financing activities. Looking at the balance sheet, we opened the quarter with total assets amounting to 4,562,000,000 SEK and ended at 2,841,000,000 SEK and that is a net reduction of about 1.7 billion. The change had a large effect on net debt, which decreased by about 1.4 billion SEK, and on our equity to asset ratio, which increased by 23 percentage points to 61%. The change is a result of the POM transaction, which transferred the project assets and debt financing from Aeolis to the buyer. We had a substantial increase in advance payments to suppliers and mainly equipment for Fogelås, Dollebo and Boarp. Account receivables increased with invoices issued for Storskjellskön And prepaid expenses and accrued income increased by 121 million SEK and is referring to the percentage of completion for POM. And cash decreased due to construction CAPEX in Fogelås, Dolleby and Boab, but also due to investments in other projects under development and other expenses. And finally, looking at projects under construction, POM has now been added at 75% degree of completion, while Storskjölsjön due to the handover has been removed from the list. And the remaining 25% of revenue for POM is expected to be recognized in Q2. And with that said, I'm handing it back to Per for comment on the near-term outlook. And thank you.

Thank you, Katarina. Our focus is on advancing sales for Fogelås, Dollebo, Boa, Pinova and Fageråsen. Home construction completion and the final collection of The final milestone payments expected to range between 25 and 30 million US dollars expected in Q2. We're looking to close pay as produced PPA for Fogelås, Dalbo and Boa. and line up key supplier contracts in late stage projects. We have also significantly, during the last quarters, advanced our next Latvian project, Valpana. So we're performing a lot of design optimization for that project in line with the environmental permits that we have received. And we're looking to optimize the financing structure for business plan 2025 to 2027, including a potential bond issue. And of course, we keep a close eye to and evaluate and mitigate the value chain tariff exposure. And finally, before proceeding to Q&A, I wanted to mention that we will once again distribute a very short survey via email to the participants of today's call. And the purpose is to improve our investor communications. We are very grateful for your input last quarter and hope that you can recognize some of the changes already made in response to your feedback. Thank you for listening and we will now proceed to Q&A.