INTERIM FINANCIAL REPORT

Q3 20221

HIGHLIGHTS

  • Total revenue of NOK 59 million for Q3 2022 compared with NOK 56 million in the previous quarter.
  • EBITDA of NOK -4 million for Q3 2022 compared with NOK -3 million in the previous quarter.
  • The Dogger Bank consortium intends to charter one CSOV for Dogger Bank C for commissioning and construction work with commencement in mid-2025. IWS has already secured contract work for Dogger Bank A and B. The intended new charter contract is under documentation, with expected signing in Q4 2022.
  • The EUR 56.25 million senior secured credit facility for the financing of the two first CSOVs has been classified as Green under the bank's green financing framework. The reclassification highlights IWS's commitment to ESG and sustainability.
  • Good progress on the CSOVs under construction at China Merchants Industry Holdings Co., Ltd ("CMI") with an expected delivery of the first vessel during the second half of Q2 2023. The launch of IWS Skywalker was successfully completed on 8 November and the first steel cut on IWS Seawalker and IWS Starwalker was completed on 9 November.
  • The 30% owned PEAK Wind continues the strong growth with an increase in Q3 2022 net revenues of 47% year over year to NOK 47 million. The number of employees has increased by more than 50% since year-end 2021.
  • IWS Services continues to develop with an increase in Q3 2022 revenues of 7% versus Q2 2022, explained by ProCon and Green Ducklings.
  • Continued strong market for CSOVs with increased charter rates year-over-year and higher newbuilding prices, improving the first-mover advantage of early market entrants.

1 Please see Appendix A for definitions, explanations and reconciliations of Alternative Performance Measures (APMs)

INTEGRATED WIND SOLUTIONS INTERIM FINANCIAL REPORT THIRD QUARTER 2022

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OPERATIONS

Group structure

The activities in the Group are organised into IWS Fleet AS ("IWS Fleet"), IWS Services A/S ("IWS Services"), and the associated company PEAK Wind A/S ("PEAK Wind").

IWS Fleet is the owner and operator of high-end CSOVs with four newbuildings under construction at the leading shipyard CMI and two options.

For IWS Services2, the two Danish offshore wind service/consulting companies ProCon Group ApS3 ("ProCon")

and Green Ducklings A/S4 ("Green Ducklings") form the base of the supply chain service offerings.

The 30%5 owned PEAK Wind is the leading provider of operations and asset management services to wind farms and is classified as an associated company.

These companies form the base of Integrated Wind Solutions' ("IWS" or the "Group") strategy of becoming the preferred service provider within the offshore wind sector.

Supply Chain Services

Operations and Asset Management

Owner and operator of

Electrical engineering & services

Wind farm consultancy, operations

and strategic advisory

high-end CSOVs

and asset management

Group management

The group management team consists of CEO Lars-Henrik Røren, COO Christopher Andersen Heidenreich and CFO Marius Magelie.

IWS Fleet site office at CMI

IWS Fleet site office personnel are in place at the CMI facility in Jiangsu, China and will follow up on the construction work on the newbuildings throughout the entire construction period.

  1. 97% owned by Integrated Wind Solutions ASA
  2. 75% owned by IWS Services (100 % of the voting shares)
  3. 100% of the voting shares
  4. Fixed price option exercisable by September 2024 to acquire an additional 19% of shares, pre-dilution from share-based option program to key employees

INTEGRATED WIND SOLUTIONS INTERIM FINANCIAL REPORT THIRD QUARTER 2022

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MARKET OBSERVATIONS

Offshore wind

Offshore wind continues to see high activity during the third quarter of 2022. Development activity is high in European incumbent countries and accelerating outside Europe, mainly in East Asia and the US.

The energy crisis in Europe following the war in Ukraine has shifted attention to energy security and a future less reliant on imported Russian gas. For many European countries, offshore wind has been launched as one of the key drivers for this transition.

The offshore wind market is nevertheless not excluded by the global inflationary pressure and supply chain disruptions, which could also increase the cost of offshore wind. The sector, in general, should, however, not be more affected compared with other renewable energy sources.

The European countries continue to increase offshore wind targets. During the third quarter the European market forecast increased by 6 GW to 142 GW driven by new targets in Denmark, Netherlands, Ireland and Italy, according to 4C Offshore. Green Ducklings risk-adjusted expectation is for 129 GW in 2030 in Europe due to uncertainty related to supply chain and grid infrastructure constraints and lengthy project permitting processes.

Another key trend is the push for clever grid system integration across offshore wind projects leveraging benefits

from Power-to-X ("PtX") and alternative fuel. A trend driven by the need to provide decarbonised energy to heavy transport and industry.

Market for CSOVs

Shorter-term charter rates for walk-to-work ("W2W") vessels have increased in Q3 2022 compared with Q3 2021. Still, they are seasonally lower than in Q2 2022 as vessel availability has increased ahead of the winter as the prime construction season is coming to an end. However, there is limited, if any, availability of high-end Tier 1 CSOV's in the short term.

The macro environment is still positive, driven by a combination of high growth in offshore wind farm activity and an improved market for oil & gas and subsea globally that removes capacity from offshore wind. Several IMR/Subsea vessels have been fixed long-term at rates above historical levels in the W2W market, and we expect this trend to continue.

The global fleet of CSOVs and SOVs counted 36 vessels in operations of which 23 are considered "Tier 1". The total orderbook consists of 32 vessels, of which four vessels have been ordered by IWS.

With limited new supply, coupled with continued growth in offshore wind farm development as well as a stronger oil and gas market, we see the market for CSOV vessels continue to improve.

INTEGRATED WIND SOLUTIONS INTERIM FINANCIAL REPORT THIRD QUARTER 2022

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MAIN EVENTS DURING Q3 AND POST-QUARTER EVENTS

Newbuildings

The company has ordered four CSOVs from CMI with an expected delivery of the first vessel, IWS Skywalker, during the second half of Q2 2023. The second vessel, IWS Windwalker, is scheduled for Q4 2023 delivery.

The yard is progressing well on the first two CSOVs under construction, with the successful launch of IWS Skywalker on 8 November 2022. The first steel cut ceremony for IWS Seawalker and IWS Starwalker took place 9 November 2022.

The firm average yard price for the four vessels is about EUR 46m per vessel (turnkey contracts). About 50% of the vessel value is related to Norwegian export companies providing

advanced technology, ensuring safe and efficient operations. The global shipyards are not immune to the global supply-chain pressure, and there are general risks related to the timing of delivery of key components.

Employment

IWS Fleet has been notified by the Dogger Bank Consortium that they intend to sign a charter contract for the third phase of the wind farm development, Dogger Bank C. The charter will commence in 2025 and the contract is being documented with expected signing during Q4 2022. The company has already secured two separate charter contracts with the Dogger Bank consortium with a start-up in 2023 and 2024.

Fleet and contract overview

1) The contract will be effective when contractual documentation is completed, expected in Q4 2022.

Financing

In April, the company signed the EUR 56.25 million Senior Secured Credit Facility that will be used for long-term post- delivery financing of the IWS Skywalker and IWS Windwalker.

Skandinaviska Enskilda Banken AB ("SEB"), SpareBank 1 SR- Bank ASA ("SR Bank"), and Export Finance Norway ("Eksfin") has during October 2022 classified the loan as Green under the banks green financing framework. The reclassification highlights IWS's commitment to ESG and sustainability.

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Integrated Wind Solutions AS published this content on 15 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 November 2022 07:40:08 UTC.