Sif Holding N.V. ($SIFG)

Good morning, everybody, here at the annual number presentation of Sif Holding 2025. My name is Fred van Beers and with me are analysts from various banks and institutions and everybody online, also welcome. For those here in the room, before we start, there's no safety drills planned for. If there is an emergency evacuation we need to go for, it will be a buzz sounding and follow the green signs to the exit, please. So before we continue and go into what is listed here at the first page is highlights, I'd like to introduce the people attending from the Sif side. On my right-hand side, for those here in the room is Pepijn. Pepijn Timmermans, our new COO, who started 1st of December. And Pepijn, maybe you can give a quick introduction of yourself.

Yes. Thank you, Fred. It's really exciting to be here, first time in this presentation and also be part of the, let's say, Sif family with its very warm culture. As you might know or not, I have a strong background in automotive manufacturing, recent years in the VDL Group. Within that organization, I was responsible for the supply chain and digitization. So you can imagine that it's quite an interesting learning curve for me to get acquainted with the offshore and Sif business. But on the other hand, being here, there are quite some parallels. If you look, for example, at the new site at Maasvlakte, then that's a really beautiful flow-driven manufacturing site, which has quite some parallels with what automotive repetitive manufacturing is doing. So yes, I'm very excited to be part of this team and help in the growth of the organization.

Thank you, Pepijn, for introducing yourself. We agreed for this session that Boudewijn and I will present because on my left-hand side is Boudewijn, our CFO, known to all of you, I think, and he will take us all through the numbers and also Pepijn and I are available also for operational questions if they are there. And then last but not least, I'm here myself as well. As you probably may or may not have seen, we also released a press release this morning that I will step down as CEO 1st of August this year. Koen Bogers, previous CEO of Stedin is appointed as the new CEO or will be appointed as a new CEO, I should say, we have, of course, a shareholders meeting and still Annual Meeting of Shareholders in May, where this will take place. Koen will then start in May in a sort of, call it, learning months training session to learn all about Sif until the 1st of August. And after the 1st of August, will full time continue as adviser until at least the 31st of January '27 in order to also help introduce Koen in the best possible way all external contacts and do the special projects for the Board. So that is good maybe to also announce to this meeting. But enough about people. Let's go into the key messages we'd like to bring across or have brought across this morning in our press release. First of all, I think, again, safety remains our #1 priority, and we'll come back to that a little bit later. We see the contribution margin materializing as we have planned for and as we discussed many, many times in these meetings as well, which looks good. Extremely happy that the production facility at Maasvlakte is more and more starting to deliver according to plan. We are on plan as we announced in August last year. We'll come back to that a little bit later. What is a real challenge at the moment, I think, is the market. We'll come back on that as well. The short-term market, '27, '28 is seeing quite some delays in FID taking on customer side for new wind farms. Having said that, the longer-term perspective is extremely good. We'll show some on that a little bit later as well. So -- and I think the good news, the main topic here I'd like to bring, of course, Sif is ready to deliver now with the factory running, with the capacity available, with the teams and organization in place to deliver on the North Sea Summit declaration ambitions in Europe mainly. We have an order book and a performance that underpins the guidance that we have given some time ago, a minimum of EUR 135 million EBITDA for 2026. And of course, the question we all have -- you will have is how about 2027 and 190 kiloton in exclusive negotiation. We'll come back to that a bit later and what's going to happen afterwards as well. Some highlights because you need to celebrate also a little bit what happened last year. That is that we -- as you all know, we delivered Empire Wind 1. The project is fully paid for, installed successfully in the seabed in the Atlantic close to New York. Largest monopiles ever, well done. It was tight, but we did it. And we're really following up, of course, what's happening now in the U.S. with all the legal cases that are being brought forward locally. But I think I'd like to underline here again that whatever happens there will not affect at all Sif because we have done our part of the job fully. The Maasvlakte facility is ramping up as I said before, and we are that we can deliver on the 2026 order book. Ecowende is close to finished as we speak now. And we have the [ 3 monopiles, ] 52 of them, all produced in the meantime according loadout plan that needs to be completed this month. And then last but not least, a lot of attention is being paid from our side, but also from our colleagues in the EU and others in the offshore wind supply chain to make sure that the offshore wind, which is essential for the energy independency is considered strategic and is also working on the basis of a level playing field in competitive landscape. And although there's a lot of on whether that will happen or not, given the Chinese imports at low prices. I'm personally very confident that we are on exactly the track that we need to be to make this a level playing field business and a strategic business in Europe. I'll come back to that a little bit later as well. So let's dive into the ramp-up plan for Maasvlakte and the performance of Maasvlakte a little bit. Output significantly improves and is stabilizing on a level of 3 to 4 monopiles a week depending on size, et cetera. We actually will see in the first half of this year an average of 5 to maybe 6 monopiles because we have a slightly different design [ week, ] which is the planning for the period ahead of us. So that is according to plan achieved in December. And after the usual ramp-up issues that you see after a holiday break, Christmas, the week -- the snow week in the Netherlands didn't help either because we couldn't get people back from all places in Europe. So that caused a bit of a delay, but we have been able to ramp up quite quickly, I would say, and controlled to the level I just announced. We always -- we also see that this approach of safety first, quality second, output third is paying off and is becoming more and more the standard in the new team at Maasvlakte, which we will show also in the safety statistics a little bit later. And we are now gradually moving from a ramp-up phase to a continuous improvement phase during the course of this year. As you may remember, we announced in August that by mid-2026, we should have reached a stabilized position. We're on track on that one. We have passed successfully the milestone of 4 monopiles a week in December. So we have that behind us. So we are more and more becoming a normal factory and platform. And important role in this whole improvement is the fact that we have a whole senior and middle management now in place in our operation, and that starts paying off quickly. Pepijn, he entered more or less at the latest, I think, 1st of December from the team and is more and more coming up to steam as well in this process. So we are really happy with what we see happening here. On the safety statistics for the whole year of 2025, we cannot be satisfied. And we're not. As you can see in the middle picture, the first half of 2025 saw 7 lost time injuries on the basis of a normalized, I would say, 11 total recorded incidents. In the second half, we saw still too many, 2, but significantly less compared to the first half. And so we're on the right track there when it comes to safety. Sickness leave, still high. We are not -- although the industry standard in our business is higher, we see more normalized numbers of 9% to 10% in our business when it comes to sickness leave. We feel that we -- our ambition to reach 5.5% is necessary and doable. And as you can see in the bottom bullet, we are having a bunch of activities varying from case management to more investments in working conditions and individual employee support to bring down the sickness leave significantly during this year. So that is -- the actions are in place. The trends are positive, but we're not there yet. Good to mention here maybe as well is that we have agreed as an industry in Europe to join forces in attacking the safety issues in our industry because they're quite typical for all of us. So through our offshore wind foundation alliance, we are now having a working group to also tackle this and even certify the European foundation safety standard. Let's make a move to the market. These are the -- this picture is fresh. The ink is still wet. It is coming from Wood Mac, Wood Mackenzie, and it shows the gigawatts that are planned to be connected to the grid up till 2040 for offshore wind, excluding the U.S., which is not so difficult because that's 0, although there is something coming to grid, of course, in the coming year still as depending on all the court cases. But excluding China, excluding the U.S. And numbers cannot be listed, but what can be told is that when you look backwards, '25 backwards, the average is roughly 4 gigawatts that has been connected to the grid, offshore wind. And you see a massive jump in '26 and '27. And the jump basically comes from the fact that quite a few projects have been delayed when it comes to grid connection. And remember, foundation production is about 2 years, 1.5 to 2 years in front of the -- not ahead, in front of the grid connection. And '26 sees a major jump, and that has to do with, for example, Dogger Bank, where they had turbine issues, installation of monopiles has been done for all A, B and C already. The turbine installation is coming for A has just been completed, B has just started, and they're all expected to come on the grid this year. So that's what the jump says. But you also see that '28, '29 and '30 are expected to be significantly lower. And that is exactly the period that we are now -- or the trend that we are experiencing now in our tender activity and FID taking for new projects. And this also includes 190-kiloton project that we have in exclusive status a little bit later, I will come back to that. But what I think is important to mention here is also that despite all hiccups in the industry, the geopolitical situation, the drive to go for energy independency in Europe is stronger than ever before. And what you see happening is this famous wave of projects coming to the grid in the future. But in a stable way, we would like to plan. We see that this demand is definitely going to happen or planned for, and it may face some delay, but it is going to happen. So strong long-term market outlook. Competitive landscape is challenging. It's challenging for all EU supply chain players. And in some extent, I claim also for our Chinese new or relative new entrants since the market that has been projected is delaying. We are facing aggressive Chinese import competition. That's a fact. And we see certain projects or developers deciding to go for Chinese imports. What I think is important to state and reiterate from our point of view, we are -- we know it's also the second bullet. We know for a fact that the EU supply chain is up to the task that is ahead of us. There's roughly EUR 2 billion invested in ramp-up of monopile facility in Europe and the U.K. We do see delays and challenges in the ramp-up of that capacity. We are an example of it. We saw the same happening with Haizea. Everybody can read the papers on the SeAH investment in the U.K. but all of them will succeed and we will be there. And it's -- this is one of the key points also in our discussions with developers that it's a fairytale to believe that we need Chinese imports per se to make this ambition happen. What we do need altogether is level playing field, but we are not afraid, none of us in the EU supply chain. We are not afraid of any Chinese competition whatsoever as long as it's based on level playing field. A level playing field mainly relates to steel and duties on steel imports for not only raw materials or plates, but also for semi-finished and finished products. And that's what we're working on quite intensively altogether, not only Sif, but the whole industry with Brussels and all the member states individually for Germany, Denmark, Spain, the Netherlands and Belgium specifically and the U.K. independently from EU is doing the same to make sure that this level playing field situation is created. And in this respect, I think it's worthwhile mentioning that yesterday -- and we will come back to this later, next week. Yesterday, we received a confirmation from EZK, the Ministry of Economic and Climate Affairs in the Netherlands that Sif is 1 of the 2 companies now declared strategic in the Netherlands when it comes to industry energy transition and independency. A bit related to what is mentioned also in Dragi and Wennink report, we now see actually happening, and we are going to dive into the effects and what does this mean for us. We will come back to that later for sure in separate messages. So you can all read the Netherlands -- the Dutch government, the new government has a high ambition again to go for offshore wind. We are in very close dialogue with the Dutch government on this road map for offshore wind. And without giving you all the details, also the exclusive deal that we have in our order book for 2027 will -- we're not sure yet exactly when it will fall, but it's still definitely an exclusive deal. And the, let's say, the developer and the government that this relates to are in very intense contact, and we are also in that discussion to make sure that this deal is closed as soon as possible into a firm contract because it's needed for the rollout of offshore wind in that country. And I can't give you the country. I can't give you the name of the developer, but you all know what's available and how they're still in the market. With that, I'd like to hand over to Boudewijn to take us a bit through the financials.

Sure. Thanks, Fred. So we'll dive into the numbers in a bit more detail. I think just some of the key takeaways on what we reported this morning is our contribution as an absolute value is up 28% from 2024 to 2025. And that mainly came in the second half of the year. When we did the half year results, we're pretty much on par '25, '24. We've seen a marked improvement in the second half year, which has to do with the stabilization and ramp-up of the mass [indiscernible]. You see that in the revenue as well. And really pleased, August was not a nice announcement when we cut our guidance, but I think it was a very realistic decision we took at the time and pleased to see that w,e, I can say, exceeded, met the guidance that we gave, again, fully driven by the production improvement and ramp-up we've seen on Maasvlakte. So we said, Fred touched on it. We really are set up and ready for growth, realizing that '27, '28 are less secure and a bit more uncertain. We have this exclusive project, but we still need that to become completely firm and in the order book in terms of when we're going to produce it. This is a typical project business. Sif has gone through these periods in the past, and we have the resilience and the robustness to deal with this. All of our deliveries are in quality and in time for installation under our clients' installation windows. So again, there, even though our struggles -- what we've produced, we've produced on time, clients are installing them, and we've now moved on to the next project, Baltyk, which is fully in production. Quite a significant increase in FTE. I think again, there, 2024, we were in construction in the start of production on the Maasvlakte and still full in production in Noirmoutier. '25 was a year of full production on both plants. So a significant increase in FTE related to that increase in production. Moving on to the next slide, just showing it in some numbers. So even though production in terms of total kilotons is on average on par with the last few years, what we see is a marked improvement in contribution in absolute terms, but also per week and the increase in EBITDA and that is because the contracts we have now are financially more attractive and more reflective of the complexity of the work. We've discussed in the past that metrics per ton are becoming less relevant because every ton of production is different, but we do see that the financial returns on these tons are definitely improving with the order book that we have. We discussed in August about how realizable is the growth in EBITDA that we're projecting and how confident are we in the numbers that we've given. And I think here, you see it as well is at half year, we were on par with 2024, both financially and in terms of production. But with the ramp-up we saw in the second half, you see a significant uptick both in terms of contribution and in EBITDA, and that's because that marginal increase is so high. The costs are there, the cost base is there, the installed base is there. So every tonne additional we produce has a significant impact on both contribution and EBITDA, and we'll see that even more in 2026. Working capital is still at a very high negative level. We recognize that, again, that is a nature of our business. We get a lot of advanced payments from customers well in advance of us actually starting to do the work, and that's reported on our balance sheet as contract liabilities. And also as these contracts get bigger, because this is a snapshot at a moment in time, which is 31 December, we obviously have invoices that we've received from customers that we haven't paid yet, and that's also sitting in our liabilities on our balance sheet. So this number will continue to be volatile. But as we run through our order book, we will see it coming down in 2026. And then obviously, depending on new contracts that come in, whether we get advanced payments there under those that will either increase or not result in increase in those liabilities. Then just a few ESG KPIs. So we've seen an increase in our CO2 emissions, again, partly logical because of the significant ramp-up we've seen in Maasvlakte, a lot more production, a lot more energy usage. Unfortunately, the Haliade, the wind turbine hasn't produced the results that we expected. So that hasn't helped to bring down our CO2 emissions. We're actually in the process now together with GE to decommission it. We don't believe that this turbine will deliver the results that it needs, and we're together with our -- one of our teams looking at alternatives to substitute the Haliade. Fred already touched on safety. On the lost time incidents we had in '25, it was not a good performance, and you see that as well in the LTIF. Obviously, with more production, the LTIF is lower than it was in 2023. But in absolute numbers, our safety performance was not on par for 2025. So we've spoken about the order book. So we see the 190 is in there. It's the exclusive contract we have, and we still have 343 kilotons in the existing orders that we'll be producing in this year and into 2027. The strong contribution per ton. And I think also significantly there, the contribution per month, both important metrics also as we go forward into 2026 with the order book. Our covenants, we had some challenges in the third quarter of the year where we were actually not able to calculate the leverage covenant, and that has to do with the methodology of calculating EBITDA for the covenants, which is a trailing number where we have to do IFRS adjustments. That was a negative number. So when you divide net debt by a negative number, it's either 0 or N/A. So under the financing agreement, we had to ask for a waiver. At the time, because we were in the ramp-up and we weren't entirely certain how the year would end up, we asked for an amendment on both leverage and solvency to give us some headroom for Q4 in 2025. In hindsight, that wasn't necessary, but I'm still glad we did it. It just gave us the headroom that we may have needed. But our performance was good enough that, that wasn't needed, and we'll see the covenant levels returning back to normal mid-'26. So just looking as a whole, we remain focused on accelerating the energy transition with our monopile manufacturing, our TPs and our pin pile business. The capacity that we have, there was a significant investment both in terms of people, in terms of capital. The capacity is there. Fred touched on it, the EU is ready to deliver on the plans. We need those plans to materialize. Obviously, we're dependent on developers and the government on coming through with the projects, but we have every reason to believe that, that is going to come, and we're ready for that. We're ready for Europe. So it is an enabler. The investment we did, we still believe was the right investment. Our plant is in the sweet spot of the monopiles that we expect to come in the next few years. So we really do expect a lot of activity. But as we said a few times, '27 and '28 remain challenging. Clearly, the exclusive project we have will go a long way in filling our order book for that period. But there are other projects that are out there, maybe some opportunistic projects, maybe some developers who decide to capitalize on a constrained supply chain and move their projects earlier. So we have a very active sales team. We have a very, very active pipeline of activities, and we're closely following the market, and we're ready to deliver. And we certainly are, as it stands today, on track to deliver our EBITDA guidance for 2026. Fred, any closing remarks?

I think the closing remark is let's open the floor for questions on this because there will definitely be questions. Philip Ngotho.

Philip Ngotho from Kepler Cheuvreux. First question here is actually on your cost base. So more [indiscernible] 2027, 2028 order book. But I was wondering, I also understood that you have quite a flexible FTE base, more than 30%. I was wondering in terms of numbers, how do you -- what do you see as a -- in a situation where you might have no activity or a negative scenario, what would be your cash burn or your minimum cost that you actually would still have to expense or will be facing in a year. And then the other question is, how do you look at the balance sheet in such a situation, especially given the working capital really coming down, less negative. Are you having -- already having talks with the banks on that? And what's the situation on that?

Okay. So let me -- I'll also ask Fred to jump in to give a bit more flavor. But I'm not going to be able to tell you specifically what our cost base is in a scenario. What I can say is you touched on the most important point. We have quite a big flexible layer in our labor force. So if there are periods where we have less work or where we consciously choose to slow down production where we have that space under our client contracts, we will. And that flexible layer is the first one that we'll focus on to bring those costs down. But at the moment, as it stands now, we have an order book which runs into 2027, and that could be early '27, that could be later '27 or first half '27. We have that flexibility under delivery time line with our clients. So that's one thing we're looking at how do we want to optimize that. And that is very much tied to when this exclusive contract starts. Is there a period in between there where we might have no work? That's possible. But it's not something that concerns us because there's a lot of things we can do in that time. But the most important thing is that we need to maintain a level of skills and expertise within our production. So we can't say we just ramp down to 0 and then the next time we have a project, we'll go out in the market and find people. So we have to find that optimal balance of maintaining the right base within our knowledge of producing monopiles, both in [ Luton ] and the Maasvlakte, spreading that. We can also slow down in one area, move people and keep them occupied in the other area. And all of these scenarios are things we're looking at, at the moment on how we deal with certain scenarios and how we manage that within our labor force, within our cash, within our cost base to stay ready to produce.

And to add to that, I think it's important to remember that we have seen now 4, 5 years of high activity in this market. But this is a market that follows the curve. We are in a project business. And we have been in the situations in this business before that we had to deal with some downturn in the market. So as you rightly say, the flexible workforce that we have is significant, and we are used to work with that and our people are used to deal with that. I think there's a few other things to remember here. In our order book for -- that we have for '26 and beginning of '27, we have still quite a bit of flexibility in when can we produce what. So we can -- that's part of our scenario planning and in the dialogue also with our customer to see, okay, what can we do or what should we do and what do you want us to do in order to spread a bit production on one side. Then there is, again, not to be underestimated this 190 kiloton where there is a lot of activity in closing it. And all the discussions that are happening have nothing to do with us. They all are related to -- so it's not that we have a dialogue with our customer on certain items that are holding this up. It all has to do with everything we read about on a daily basis in the market, whether it's grid, power takeoff, all these elements play a role in this case. And the third part, I think we shouldn't forget is that with a market that is becoming tighter, also the horizon of having firm order books is becoming less long and shorter and shorter. And we are not -- what the last thing we are doing is getting nervous about such a situation because that is part of the dynamics of this business. And we've seen spot opportunities also popping up. I think all of you have read the renews on what happened with Hornsea 3. Interesting enough, that was news that was about 1 year old when it came in news. So that was quite interesting to read. There have been the spread of the order book on Hornsea 3 has happened already a year ago. We, in all openness, were also approached. We have thanked for the interest because of the fact that we had a full order book and a factory that we're ramping up. So I've read you said that there was concerns about the possibility of it, well, we were a bit surprised with that because it's, first of all, 1 year old news. Secondly, we couldn't support given our order book. And that's the dynamic of this business. So coming back to your point because that's the underlying question, I think, when you are in a downturn, can you manage it? Yes. Do we do scenario planning, as Boudewijn explained? Yes. Is it the right moment to shift gear, so to say, and act on that? No, because there is still ample time left to deal with whatever scenario that we may face on our path. But it as a bit from all of us when it comes to patience.

[indiscernible] Maybe as a follow-up. When we look at what's more or less the latest delivery date for the monopiles you have in your order book, excluding the one which is not firm yet, talking about spreading production over time. What's the latest delivery date of...

Exact date, I can't get as part of the discussion, butit will not be the end of '27.

Okay. Assuming -- just assuming it will be mid-'27 and you say, okay, we're going to spread production equally over time. Will you then still be able to meet your '26 guidance? Okay. Then you mentioned you have been labeled strategic by the Dutch Ministry of Economic Affairs and Climate. What does it actually mean? Because normally, when you're strategic, you're not allowed to be acquired by another company, but what will it mean for you? What are your...

Yes, that's a good point. That is now, as you know, the Net Zero Industrial Act is new, is being filled, and we will open now the talks with also economic affairs. What exactly does this mean -- because it is -- well, it's not nothing. It's not a marketing stand, so to say. But that's why I mentioned it because it does mean that in the Dutch tenders in decision-making, there is a certain element of preference for Dutch/European supply chain in the evaluation of the tenders. To what extent that will work out and what exactly the percentages that we can earmark because of this stamp is something where we will come back on shortly.

Okay. And then [indiscernible], you mentioned that you had won an order for projects, Premium Baltyk 1 and 2, the 48 pin piles. How much kilotons does that involve?

4.

YOkay. And then lastly, for the moment, you are tendering for the first decommissioning orders. I know you're interested to recycle the steel. But in the decommissioning itself, what's your business model?

The business model is basically that, first of all, that we have teamed up with Ballast Mega for the scrap steel with Dillinger. And the business model is that we take a turnkey responsibility in the joint coalition with Ballast to completely to sort of get the keys handed over to us, and we will then decommission the whole thing and deal with all the scrap streams from out of, whereby we, specifically as Sif will take care of the steel part in such a way that it is cut and prepared in such a way that it can go directly into the electric arc furnaces of Dillinger that they are building as we speak. So we get a true circularity of steel. And for Dillinger, it's important because if you start producing in the electric arc process, it's very helpful that your scrap material is more or less compliant to the new steel that you produce. That's why input from Dillinger into the Dillinger production is so important. So that's the key in a nutshell.

Thijs Berkelder, ABN AMRO ODDO BHF. For meeting your minimum guidance, what kind of tonnage is needed there in terms of sales?

It's -- let's -- if we give a number, I would say it's probably about 3/4 of the order book.

Excluding the exclusive contract.

Yes.

Will the exclusive clients prepay or not? Is that clear?

No, we can't say anything about that.

Yes. A lot happening in the world right now. So what in your view is Middle East impact meaning for you? And related to that, energy prices now spiking. You are missing the Haliade now. So what kind of impact can we expect from energy prices on your P&L in '26?

Let's start with the market first. What I think what we see, and you've seen also, I guess, the news on nuclear power plants in Europe, for example, is that the drive and the determination to speed up the energy independence in Europe is only increasing because of this. And that -- and in our view, that means that everything that's available is needed to reach that point, meaning that we are not -- I think we're actually supportive of the initiatives now being taken on nuclear power. Supportive on -- very much supportive on the North Sea Summit declaration. And what we clearly see, and that's where the industry actively needs to help in joining forces in Europe with the public domain is that our politicians for decades have not been thinking or being used on working on mechanisms that actually are against free trade -- work against free trade, global free trade. So now they have to actually protect markets and they're really struggling with how to do that. And that's where we, Sif, but also as a branch are taking very active initiatives to help them out in order to achieve that. And that's because that's the biggest concern we have in this whole thing that the time needed to turn all the ambitions into action could take too long. for the others to work on. And then on the energy price itself, I think for us, it's minor, has always been minor also during corona. And then we saw some impact. You remember that discussion, but still it was not a show stop.

Yes, because we've moved to a large part of our energy usage to electricity in the reduction, for example, that is our biggest exposure. Gas is a relatively small portion of our cost base.

And then last comment, the Haliade is predominantly contributing to a CO2 footprint and not because it's cheaper because it's not directly going into our substation. It's going into the grid and we take it out from the grid.

Clear. Hornsea 3 is no longer a potential for you?

It was already 1 year ago.

Yes, yes. Yes, I agree. But now RWE has taken over Norfolk and won the U.K. Round 7, I would say, with a clear preference to have the job done by SEI in the U.K. probably from a U.K. government perspective. But on Hornsea 3, the U.K. already needed Haizea, second supplier. So have talks already started there? And yes, that's a real competitive battle because all your competitors also need the volumes.

Normally, we don't give the disclose on project specific specifically. But what I can tell you is that our RWE a customer, we will start producing or are producing started production actually on [ Karr ] RWE, we are in very good talks with them, both on the commercial side and on the project side. And we are definitely also looking at ways to continue our business when it comes to AR7 U.K. projects in general, like we always have been active on the U.K. projects. And even if the Sea factory is fully up and running, they simply cannot deliver the whole demand for AR7 from that cycle.

Yes. And looking at your expected factory utilization, is such order still possible for '27?

Maybe you never know. I remember that.

If your exclusive clients really shifts in the second half '27, do you then still have capacity [indiscernible].

'27, normally speaking, is '28 and [ onwards ].

And there's a marshaling site being developed in the Port of Rotterdam where you...

House power project.

We are in -- we are one of the interested parties in part of that.

Yes.

And that will be then really your initiative or in a JV structure or...

Too early to mention to say. But we are following that very closely. Please bear in mind that we have, at the moment, 85 hectares available there, of which partly 20 hectares is filled to the factory. So we do already today have possibilities for mastering logistics.

And then maybe for now, finally, your view on next-generation offshore wind turbine sizes. Ming Yang is busy. or, probably mega size.

Probably it's a good word. And let's put it this way, all the tenders we see going well into the end of this decade are all based on the 15-megawatt platform. Vessels or Siemens Gamesa. And the overall consensus in the industry is that we should maybe for the coming decade, 10 years, stick to this standard in order to reach the level of industrialization and profitability for the whole supply chain. European perspective -- but also, you remember probably the German project where [ Minang ] was the preferred turbine that has switched to Siemens in the meantime. And I mentioned what I mentioned before for reason that there is a very strong push and action actually in Brussels and member states to now really protect the European supply chain. Question is how quick can they do it? And in that sense, the U.K. is seen as China if not Europe.

Jeremy Kincaid from Van Lanschot Kempen. First question on your order book over the quarter, it went down by the same amount of kilotons that you produced. But obviously, you've added this extra 40kilotonn project. And then obviously, the 200 kilotons got scoped down by to 190, I think. Were there any other projects which got scoped down?

It's not a scope down. It's -- as you know, we have to deal with remeasurements and the designs change. So it goes -- it can become a bit more or less. So the 190 probably will not be 190. It will be more or it will be a bit less, but it will be in the range of 190. We had an internal debate, to be honest, but we should we leave the 200 or go to 190. Both numbers can be true.

Okay. But then is there still something that I'm missing there because you've added 40 kilotons with this new projects.

The numbers don't add up in your calculation.

I have to crunch. I can't give you an answer on the top of my head. I'll come back to you on that exactly what the deviation is.

How many tons are you missing?

30. Okay. And then on the now 190 kiloton projects, can you provide a bit of color around what the developers need to reach FID? What are they looking for?

I can only repeat, I think, what I just mentioned in general terms. The whole -- why do we see this dip in the market today? That is because there's a certain imbalance between power take-off, power price, grid congestion and CapEx price increases. Well, the latter part is not the issue because that's in our hands, where we have to deal with the supply chain. It has to do with the other elements and how to find a solution there is really up to the developer and the country involved.

And then the last one for me. In a scenario where that 190-kiloton project doesn't happen in 2027, do you think you can take enough steps so that you won't breach any covenants in 2027?

Yes. Good question. I can't say yes or no because it really just depends on what are the implications of that project then shifting, how far does it shift, what is the next project. So as I mentioned earlier, we're looking at multiple scenarios on what if, what if, what if, what does it mean from a cost base, what does it mean from a liquidity base, what does it mean from a covenant base? And that's an ongoing analysis. So I can't tell you we'll be fine on the covenants. I can't tell you we'll breach them. We'll need to see and particularly on how long is that period.

But what you probably can say, by the way, is that we are in a very proactive and good dialogue with all stakeholders involved in this to, I'd say, go through whatever scenario we have.

Correct. So everybody from lenders, current lenders, other, let's say, interested parties on our balance sheet, everybody is aware of the situation. They're aware of the market, a very constructive dialogue. So it's not a surprise to anybody that we're in these discussions and we're looking at these scenarios.

A question on the -- on your remarks about the Chinese competition. The market in China still it looks like they are going along with their plans on electricity and offshore wind in quite substantial gigawatts numbers. So have they -- are they entering? Are they more aggressive? How are they -- how should we read this statement in terms of what has changed versus, let's say, 1, 2 years ago?

A bit of deep dive into that. What we've seen happening is that 3 years ago or so, they were all fully focusing on the Chinese market. Then the Chinese market saw a slowdown on one side, and they had to go further offshore cost of inflation were increasing issues with fisherman or whatever. So even in China, that happens and they slowed down a little bit of rollout. The other thing what they saw happening was the massive ambition increase in Europe happening and the challenges at that time in the industry to have sufficient supplies to develop all these projects. That's why we built this new factory, for example, based on those demands at that time. But also -- and then the Chinese entrepreneurial drive started kicking in. They actually started building European or the rest of the world dedicated factories for that specific export market. So what you -- coming back to your point now, in China, there is a supply chain for the Chinese market that is different from the factories delivering outside China. And that has to do with quality, safety requirements that the non-Chinese market is requiring for their product. And so even though the Chinese market is ramping up again, that basically has nothing to do with the competition coming in from China for the rest of the world. Is that a clear answer?

And the other question I have is on the -- what you said about the -- maybe filling some gaps with projects. Yes, from my understanding, you need some time to -- obviously, you know what's happening in the market, but all monopiles are specifically designed. So the detailed designs should be known and there. Then you need some preparation, ramp up your internal design departments and so on to prepare for any new project that would arrive at one point. So how should we see the time line in these steps?

Very quickly. And maybe a good example from the past. 2020, we had the Famous Fingard wind order that we booked. We celebrated for 3 weeks and then the whole thing went up. And that left us with a 5-month empty production slot that we, I think, announced early mid-2019 at that 2020. And then we managed to fill that in, I think, 2 months' time with an opportunity from Japan in that case. I hope that we -- you remember. So that when you can really quickly when a project that has been placed with a colleague of ours, but for whatever reason, is not materializing there that we can take over as long as the design indeed is known because making it ready for fabrication and ordering the steel is then the bottleneck. But that's a matter of months, even a month, if need be. when it comes to. So in that respect, I think your point is very valid because the example I'm just mentioning is showing that we actually can do it and have done it in the past, that the horizon to decide on this can be very short to the gap you're facing and that the opportunities are happening today as well. We've talked about C3. There is -- we talked about Norfolk as one. There have been some other examples in the market that have been shifting around. So this is a dynamic project-driven market with -- and again, we were spoiled in the last few years with very long order books because of the dynamics of time in the market. But these dynamics that we are facing today are not new and not exceptional. So we're ready for that.

Philip from Kepler. A few follow-ups. First of all, the exceptional items, I see that they've continued to rise actually this year. So what is driving this? And what to expect for 2026 there? The second question I have is in terms of the European monopile capacity as a whole. Can you indicate how much gigawatt can roughly accommodate the current capacity that's available? Just as an idea, especially towards the build-out, of course, towards 2030, how much more do we need to invest or not in it? And then the last one I have is still on the level playing field that you discussed. Can you just give a little bit more details on like where are we exactly with the current status. I remember last time you sent a letter to the European Commission and it was accepted, but how far are we now? Because usually, indeed, these processes take time. So what would be a best case scenario that you could see some measures being implemented?

That's 3 questions. Start with the third one. I'll try and keep it short. Basically, it purely has to do with the ramp-up of the plant, which started already late '24. So you see already in '24 quite a few exceptional items between adjusted and reported EBITDA. And that continued into 2025 with the decision we took in the midyear to -- we ramped up our external support we spend more time, first of all, training and working with staff. So we incurred a lot of costs around that. Then as we continued on the stabilization, we did a lot of overtime work. We did a lot of weekend work also with maintenance, but also to just make sure we're continuing production to keep up with the requirements from our customers. In the period between Christmas and New Year's, we did work that we hadn't anticipated. So everything that's related to the ramp-up and additional work is classified as kind of exceptional to be between adjusted and reported EBITDA. Our expectation there, the question right now is the reason for implementing this was to say, look, we differentiate between normal costs and costs really related to ramp-up. So really exceptional above what should be normal operating costs. The decision we need to make in 2026 is are these costs still exceptional? Or are they just part of how we're going to operate our plant with such a full order book in 2026, for example, does working in the weekends become normal and no longer exceptional. So that's why I can't say do we expect that level to continue this year or will that change? We as management need to decide what is our philosophy around these exceptional costs and whether they become embedded costs or whether we still consider them exceptional and how we see those coming down as the production kind of normalizes from this ramp-up or stabilization phase.

But if the plant is fully ramped up by Q2, you would actually expect theoretically that it goes to 0, right?

In a normalized situation, you would with the order book we have and again, talking about the decisions we make, whether we extend projects where we try and execute them as quickly as possible, we can still take decisions on doing weekend work or not -- what do we do in the holiday period? Do we hire extra people to work shifts where our normal staff are on summer holidays. It's all those kind of decisions, which are pretty expensive decisions and are always focused around output delivery and timing, when do we want to and when do we need to deliver our order book.

But regardless, they will be much lower.

Over time, they will be lower, Yes. Yes. But it's not that binary. -- we say 30 June, we've hit a certain target and those costs have gone. It's not -- it's definitely not.

Our intention is to bring them...

Our intention is to bring them down.

If they have a good reason to not to.

To not to.

Then on the European supply chain, and I think I've communicated also in LinkedIn post a few weeks back. The European supply chain is up to the task of 15 gigawatts a year. That depends, of course, on how many turbines you mean for that, assume the 15 gigawatts at 1,000 foundations. Not all of them will be monopiles, but 80% for sure. Some of them will be jackets. So maybe some jackets need to come from Asia, I don't know. But from the monopile part of that, definitely, the European supply chain is up to the task. As I said before, we, as a ministry, invested EUR 2 billion. And I include the U.K. in this in monopile capacity in Germany, in Denmark, in Spain, in the U.K., in the Netherlands, in Belgium, don't forget the smelters in this respect. We also have invested in that. So we're up to the task. The message that I also like to bring across here is we did our bid as an industry. Now it's up to the government and the developers to actually live up to their promise and order stuff. It's as simple as that. That's on the supply chain. On the level playing field, that all focuses on steel. As you know, monopiles are make steel. And if you -- you need plates to make monopiles. If you -- the Chinese steel manufacturers offer these plates at very, very low prices, up to 50% of the European market, don't. The Chinese plates are facing import duties up to now in the new rules, 82%. So that is -- and that brings those plates on par with the nonsubsidized European steel manufacturers. However, if you bend that steel plate into a circle and weld them together and build a section or a monopile out of it, that steel is not facing any import duties. And that's where the thing goes wrong. So they can -- and that outperforms, so to say, financially, the cost of transport. So the thing that's happening now is that steel is protected again with new import duties, and there is a commitment from Brussels. -- that in the first evaluation of this new ruling, they are -- will consider semi-finished and finished products for businesses like ours. That is not confirmed. That's why it's not an official statement that we can make, but the intention there is to do it. The debate now is when to do it? Will it be in 6 months' time or 2 years' time? Normally, the CIRCle is Cyprus 2 years, every 2 years, we evaluate. There's a strong push to do it in 6 months. And if they are then able to do it in the correct way, we have a level play situation. We are not afraid. And then we say you're welcome to compete. Please come because that makes -- that's healthy. Our industry, we don't ask for protection. We don't ask for industry policy politics or so because that is only increasing the price. But the only thing we ask is a level playing field in steel. and I've been in Berlin together with our steel producer also because they are, of course, also seeing this as a very date issue that they are investing EUR 5.5 billion now in the electric arc furnace and may see their complete business floating away because of steel imports of complete monopiles out of China. So we are joining forces there as an industry, also visiting Berlin, visiting the Hague wherever it is needed to bring this message across.

I just ask one. How much would the duties have to be to get it to a level playing field in like rough numbers a range if you're talking about 80% for the plates and...

That's not fair. I think you talk about numbers like this double digit in the 20% to 40%.

A little bit less known impact of CBAM which will also play a role in any imports coming outside of Europe. So that's also going to play a role in this equation anyway. But CBAM is more one who's going to pay for it, what is the impact? That's a little bit less unknown how that's going to play out over time.

A couple of follow-up questions. Thijs Berkelder, ABN AMRO ODDO BHF. I still have questions on your ramp-up because the snow, the ski holiday, et cetera. But you said 5, 6 monopiles per week in H1 '26.

[indiscernible]

End of H1. Okay. Okay. Not in H1.

No, because the order did not start yet, so we couldn't. And then the question could be, Thijs, how come that we can go to 5, 6. That has to do with this famous design. The standard design, the reference design that we always communicate was 4-week Tiles, 2,500 tons each. And the project that we now started building is traditional monopile, not Tiles. Traditional monopile, a bit shorter. Big diameters, by the way, but that gives us a possibility to build 5 to 6.

And how much weekend work, holiday work is then needed in H1?

Let's say the principle that we want to work towards is going back to 24/5 with weekends as a buffer for preparing for the next week, finishing something from the previous week, doing maintenance, doing technical work. So not doing -- we never have had the ambition to do 24/7 production. So it's 24/5 plus some spillover in the weekend. I think that's a fair...

Something there. I think what we have to bear in mind here is the fact that we had -- we faced in '25 a delay of 9 months because of the setbacks and ramp-up. So we squeezed the whole order book into the end of '25, '26 and a bit in '27. And since we want to deliver on time, I think it's fair to say that in half 1 will need we get work in order to live up to our promises to the customer. So you can put it in your...

Great. Then coming back on Asia, more in general, we're talking only about Chinese, but CS Wind acquired Plot. Titan is building a Dutch Chinese building factory in Germany. Sumitomo bought into EEW. Sea, of course, has built a factory in the U.K. So it already is an Asian industry and no longer European industry. So how about your Asian connections? So can we expect more work there and/or more cooperation in the partnership with GSN Tech?

In the means of ownership. I think there's a question for us to -- there have been aging partners and parties investing in Europe, but we are a Dutch listed company. They can buy shares if they want. We have a very solid and I would say, realistic main shareholder in our company that has this company has had this company for 25 years. And that's it.

Then Dajin is going for a Hong Kong IPO and reading some analyst reports there, they claim that Dajin can conquer 40% of the European market. If your next job as from February 1 next year would be leading Dajin into European offshore wind. What would be the track to avoid?

There's quite a few assumptions.

What is logical from Dajin's perspective to go around our new European legislation.

I think that's a question for this answer, to be honest. But I think it comes back to the point that I just mentioned and what we discussed about what Dim has invested, they invested heavily in a rest of the world offshore factory, not only monopiles, but also jackets and substations and floating and vessels to transport them. So they're doing a great job there to conquer the world. We are saying we're up to that task because we believe and have reasons to be convinced on that, that our production facility and abilities that we can offer to the market when it comes to design, weights, cost leadership are up to the task to compete with D. So we have -- we don't see them as a threat at all as long as the steel is offered. I don't have playing field condition. And I think it's very healthy to say that we believe in our own strength and also the right thing to do in order to maintain the right level of competition in the European market and not let it dominate by players like that. And we welcome them -- again, we welcome them very much as a professional strong competitor as long as it's based on that.

A bit puzzled about how EBITDA will develop in '26 because on one hand, you say we go from ramping up to making the organization, the production more efficient, et cetera. So that means building up production through the year. On the other hand side, yes, we have some delivery dates whereby we need to manufacture in H1. So more or less, could you share what your thoughts are about the EBITDA delivery during the year or H1, H2? Will it be similar or H1 higher than H2 or.

No. All we can really say about EBITDA, to answer your last part of the question is the guidance we've given for the full year of at least EUR 135 million. Yes, we have some delivery milestones with customers that we're working towards both in H1 and in H2. And those we are working towards, and we're managing those with our customers. Sorry...

Q3.

Yes, first half, second half of the year. So that's why even though to the point that was made at the beginning, we were a bit delayed in the beginning of the year, but those dates still stand, and we're working towards that. So what I can say is it doesn't mean that things shift up further to the right. We still -- we compress that period a bit, but we still plan to deliver. And on a full year basis that we expect that to result in at least EUR 135 million EBITDA.

But you're not going to give some guidance about if H1 or H2 will be bigger than the other one or -- then secondly, what about your advanced payments? Because this year, you will mainly produce from those parties who have provided you money upfront. How would that develop during this year?

Yes. So that's a significant portion of the working capital. So EUR 144 million of that is contract liabilities, which are current. So that is really all exactly payments that we've already received. But they're not -- so there's -- they're called advanced payments, they're called contract liabilities, but it's because we try and match the cash flows with when we order steel, pay for steel, pay our subcontractors, pay for things. So it's not that we've received the money, but we're necessarily only going to spend all of the money this year. So there is a mismatch in timing, which means it's a current liability. But it's all related to that project, but that's going to run off during the course of this year.

But you make an estimate of EUR 100 million, is that a fair estimate? Okay. And then lastly, you always had the intention of paying back the perpetual before year-end 2025. And according to me, it's still there.

That's just prudence. That is because the outlook for '27 and '28 remains uncertain. And obviously, after that as well. But as Fred mentioned, we're very confident in the longer-term outlook. We think it's more important to manage our liquidity in a prudent way than to deleverage from an unsecured perpetual bond that we have no obligation to repay.

It's an expensive tool.

That depends on how you look at it. You could say it's expensive debt, you could say it's cheap equity.

We have Pepijn in the meeting a new COO. So what was the biggest eye opener for you in your starting period in comparing what's happening at Sif versus VDL?

To be honest, match. That's why I started. And then we started talking and I was involved in what's going on at SI and then you see a lot of parallels. Maybe I can best say it. If you look at automotive, it's really repetitive manufacturing. And if you look at the really state-of-the-art, it's an excellent concept in Maasvlakte, then that's far away from the traditional job shop that really comparable with a repetitive manufacturing site. And that takes -- that's a challenge to get it up and running because everything is connected. It's basically a bufferless process, very efficient if you are in a good flow, but challenging to get it in that flow. And I think that's where I can bring my experience to help make step-by-step to the optimum.

Your view on Roermond side?

Roermond side is -- has an other dynamic. It runs more in parallel smaller projects. So that's more -- that looks more like traditional job shop. And it can -- it's way more flexible also in handle, let's say, issues in your process and stuff. You have a lot more flexibility.

They are a good way of certainly. Come to your next question.

A follow-up question on Roermond. I think it's now decided that the area is being protected from the water.

Yes.

And will that lead to hiccups on your side -- or when will that happen?

And of course, yes, the Quayside will be unavailable for a certain period of time, but that's being done in good cooperation with the Port of Rotterdam in a period where we say, okay, then we don't need to do any loadouts so then they can close the Quayside and upgrade the foundations.

Yes. So we took care of that.

We took that in our planning.

Because this year already, some work will start took quite.

Just one follow-up for me on cash flow in the fourth quarter looked quite strong. And net debt, I think I might get these numbers wrong, but I think net cash of EUR 15 million. Obviously, you're not receiving that much cash from the Ecowende project because that's prepaid. So does that mean it all relates to Empire Wind? Or was there actually some prepayments from Baltyk in 2025?

Yes, end of 2025, so what you see, so I have it up in front of me as I'm looking at my computer. We saw an increase in trade payables as well and an increase in cash. So it's really just timing of inflows from these customers for the projects we're working on. So it's a combination of [indiscernible], Baltyk, Ecowende, Empire was really out of the books. And just coming back to your earlier question on the order book, I just realized and I should have answered the question straight away, those pin pile orders are not actually in the order book for '25. So with pin piles, we only put them in the order book when we sign the contracts. We don't treat them the same as the monopiles. So they'll come into the '26 order book because we only signed those contracts in January. I just wanted to double check before I said that, but that was Yes, because obviously, with monopiles, we have preferred and then exclusive and then contracted. So we already show those earlier with pin piles, we don't do the same.

Any questions online? All right. Okay. Any questions from this side? As usual, very good. And I think the dial up. I appreciate it. All right. Thank you. Then I officially close this meeting. Thank you for your attention and time to come here and dive into IT, and then we'll see each other in end of July, we will do this earlier now this year, the presentation of the first half year numbers '26. And then we have Q1, of course.

Thank you very much.