INVESTMENT INTENSE QUARTER GEARING UP FOR FUTURE RETURNS
“During the third quarter, large investments were made, most importantly in the MunmuBaram and TwinHub projects, which both are essential to Hexicon, but in different ways. The MunmuBaram Project, co-owned with Shell, is the most mature large-scale project within our portfolio, with the potential to be the largest floating wind farm in the world. Secondly, the TwinHub Project is key to unlock the true potential of the TwinWind™ technology and therethrough underpin the scalability of the global business model.”
- Net revenue amounted to 0.4 (4.4) MSEK
- Operating profit/loss was -56.2 (-11.2) MSEK
- Profit/loss before tax for the period was -61.1 (-11.3) MSEK
- Earnings per share basic and diluted was -0.33 (-0.03) SEK
- Cash flow from operating activities was -29.0 (-42.3) MSEK
- At the end of the period the cash at hand amounted to 55.3 (320.9) MSEK
- SOUTH KOREA: Hexicon Korea sold its 40% stake in 1,200 MW Yeonggwang Project, laying the foundation for future milestone payments.
- UK: Won UK’s first ever Contract for Difference (CfD) auction for floating offshore wind, securing 15-year revenue support from UK Government for the major stepping-stone project TwinHub.
- TECHNOLOGY ROADMAP: The win in the UK triggered a strategic and collective review of the two projects TwinHub (UK) and TwinWay (Norway) to ensure best technology verification.
- ITALY: AvenHexicon applied for property rights for five new water areas off the coast of Italy.
- SOUTH KOREA: Increased ownership in the MunmuBaram Project, from 10% indirect ownership to 20% direct ownership. Shell Overseas Investments B.V keeps their ownership of the remaining 80%.
- UK: Appointed Mingyang as the preferred Wind Turbine Generator (WTG) supplier and the WTG Front End Engineering & Design (FEED) contract for the TwinHub Project.
- TECHNOLOGY ROADMAP: Strengthened the IP portfolio. Granted patent for TwinWind™ in the United States. Resulting in Hexicon having patents for TwinWind™ in over 20 countries.
- TECHNOLOGY ROADMAP: Decision was made to accelerate all efforts towards the TwinHub Project (UK) where the syndication efforts have started for COD in 2025. The TwinWay technology demonstration project (Norway) is discontinued as the Metcentre time schedule suffered further delays.
HIGHLIGHTS AFTER Q3
- ITALY: AvenHexicon obtained priority rights over two water areas in Italy, totalling 2,550 MW, to develop floating wind farms. The two offshore areas are now prioritized for development.
COMMENT FROM MARCUS THOR, CEO: INTENSE QUARTER LAYING THE FOUNDATION FOR PLANNED DIVESTMENTS
A period of large investments paves the way for revenue growth. Hexicon’s growth plan, starting at the IPO, can be split in three phases. The first phase; investments aimed to grow the project portfolio and mature the technology. The second phase; having reached a diversified portfolio in terms of maturity, and then recycle capital through meaningful divestments. The third and last phase; to have the profitable project developments complemented by a verified TwinWind™ technology and generating license revenues.
We are now at the end of the first phase and during the third quarter, large investments were made, most importantly in the MunmuBaram and TwinHub projects, which both are essential to Hexicon, but in different ways. The MunmuBaram Project, co-owned with Shell, is the most mature large-scale project within our portfolio, with the potential to be the largest floating wind farm in the world. Secondly, the TwinHub Project is key to unlock the true potential of the TwinWind™ technology and therethrough underpin the scalability of the global business model.
Increased portfolio value: Advancements in South Korea, Italy and the UK. South Korea continues to be a region where we are highly active, two milestones were reached; our joint venture Hexicon Korea sold its 40% stake in the 1,200 MW Yeonggwang Project to an undisclosed major energy company, while we increased our ownership in the MunmuBaram Project, from 10% indirect ownership to 20% direct ownership. Turning to the European market and our project in Italy, progress was made after the end of the period as we obtained priority rights over two areas totalling 2,550 MW to develop floating wind farms. This is the first major milestone of any development which further increases our presence in the fast-moving Italian market and strengthens the project portfolio.
Progress within technology provision: TwinHub prioritisation and strengthened IP portfolio. Winning the UK’s first ever CfD auction for floating offshore wind in July, was and still is a significant event for Hexicon. In the last quarter we have continued to put much time and effort into the TwinHub Project, which is important and defines our dual business model as a project developer, and as a technology provider, proving the competitiveness of our TwinWind™ technology. The CfD auction win triggered a strategic and collective review of the two projects TwinHub (UK) and TwinWay (Norway), to ensure best technology verification. Consequently, Hexicon will discontinue the TwinWay project to focus our efforts on TwinHub which contains larger commercial turbines and a confirmed revenue support. Furthermore, we were granted patent for TwinWind™ in the United States, strengthening the IP portfolio. This means that Hexicon now has patents for TwinWind™ in over 20 countries.
The investments we are undertaking are a prerequisite to build value for the long haul. At the end of the quarter, the accumulated book value of our project portfolio is over 330 MSEK. We also have an organisation that is well equipped to enter the next phase, especially pointing out that we have a complete management team, which most recently was complemented by our Chief Projects Officer who comes from German utility EnBW.
The energy crisis is prevalent. As the northern hemisphere is entering a challenging and long winter season, the severity of the situation has become a household subject. The continued surge in energy prices as well as the Nord Stream sabotage emphasises the vulnerability in the current energy infrastructure, and the importance of accelerating the transition to fossil-free and domestic energy sources. A transition in which floating offshore wind, and Hexicon, will play an important role. Despite the macroeconomic uncertainty, we maintain great confidence and determination in our mission to accelerate the transition to renewable energy systems.
Wednesday, at 13:00 CET, the company’s CEO Marcus Thor will provide an update of the operations in a webcast.
Link to the webcast: https://ir.financialhearings.com/hexicon-q3-2022.
LINK TO THE REPORT
The report will be available for download at: https://www.hexicongroup.com/reports-presentations/.