Interim Financial Report Q4 2023

27. February 2024

Q4 wraps up a very satisfying 2023 for ZITON

The interim financial report for Q4 2023 shows a very satisfying result for ZITON, with an EBITDA for the year of EUR 35.9m, which was in the upper end of the guidance, which was increased to EUR 32-36m in August 2023.

Highlights of Q4 2023

J/U WIND ENERGY arrived at Fayard Shipyard in the beginning of November 2023 and departed the yard by mid February 2024. At Fayard, the vessel was upgraded to European standards. J/U WIND ENERGY is expected to initiate the time charter with Siemens Gamesa at the end of February 2024.
EBITDA amounted to EUR 6.2m in Q4 2023 compared to EUR 5.0m in Q4 2022. For the full year 2023, EBITDA amounted to EUR 35.9m compared to EUR 26.6m for 2022. The improvement was due to an increase in revenue reflecting improved utilisation of the three smaller vessels due to a stronger market for major component replacements.

KPI guidance for 2026 2023 performance review

We provided guidance for 2023 in the interim report Q4 2022, published on 28 February 2023. We increased our guidance a couple of times during the year as we saw good utilisation of our vessels and improved day rates due to strong demand for our services.

Weighted average utilisation rate. We expected utilisation in the range of 75%-85% when publishing our interim report for Q4 2022. The guidance was increased to 80-90% when we published our interim report Q1 2023 in May 2023. For 2023, we realised a weighted average utilization of 91% for 2023, just above our latest guidance.
EBITDA. We expected EBITDA to be in the range of EUR 28-32m when publishing our interim report for Q4 2022. In April 2023, we upgraded the expectations to EUR 30-34m. The guidance was further increased in August 2023, to EBITDA in the range of EUR 32-36m. We realised EBITDA of EUR 35.9m, which is in the upper end of our guidance.
Cash flow from operating activities. We expected cash flows from operating activities of EUR 25-29m. In April 2023, we upgraded the expectations to EUR 27-31m. The guidance was further increased in August 2023, to cash flows from operating activities in the range of EUR 29-35m. We realised cash flows from operating activities of EUR 40.1m, which is significantly above our guidance. The main reason for the stronger operating cash flow was CAPEX for the upgrade of J/U WIND ENERGY which was incurred towards the end of 2023 and paid in the beginning of 2024, leading to an increase in trade payables of EUR 6.5m for 2023. The strong increase in trade payables is expected to be reversed during Q1 2024 when the upgrade of J/U WIND ENERGY is completed.
CAPEX. We expected CAPEX of around EUR 5m excluding CAPEX for the upgrade of J/U WIND ENERGY. We realised net CAPEX of EUR 5.5m excluding J/U WIND ENERGY, which is in line with our guidance. In our interim report Q2 2023, we also provided guidance for CAPEX for J/U WIND ENERGY of approximately EUR 82m including capitalised interest costs of approximately EUR 5m related to the vessel. We realised net CAPEX including capitalised interest of EUR 86.5m for J/U WIND ENERGY. The higher than expected CAPEX for J/U WIND
ENERGY was due to an unexpected stay over in Singapore to remove the legs and ensure a safe voyage across the Indian Ocean and through the Suez Canal.

Outlook for 2024 and beyond

The outlook for 2024, is based on the following key assumptions:

The long-term charter agreement with Siemens Gamesa for J/U WIND ENERGY. The vessel has been upgraded and is expected to initiate the time charter at the end of February 2024. The vessel is expected to operate successfully with limited off-hire days. However, when extension of the legs is carried out, towards the end of 2024, the day rate on the time charter will be reduced.
The long-term charter agreement with Siemens Gamesa for J/U WIND ENTERPRISE. The vessel is expected to continue to operate successfully with limited off-hire days.
The three smaller vessels, servicing the market below 4 MW, will carry out regular major component replacements on framework agreements and other tenders attained.
The following sets out our KPI guidance for 2024:
- Weighted average utilisation rate. We expect a utilisation rate in the range of 85-95%.
- EBITDA. We expect EBITDA to be in the range of EUR 52-56m.
- Cash flow from operating activities. We expect cash flows from operating activities to be in the range of EUR 47-51m. This takes reversal of trade payables related to upgrade of J/U WIND ENERGY amounting to EUR 6.5m at the end of 2023 into account.
- CAPEX. We expect CAPEX of around EUR 7m excluding CAPEX related to J/U WIND ENERGY. In addition, we expect CAPEX for J/U WIND ENERGY of approximately EUR 22m including CAPEX for leg extension and capitalised interest costs of approximately EUR 2m related to the vessel.
Beyond 2024, the effect of having J/U WIND ENERGY on time charter with Siemens Gamesa for the full year will positively effect EBITDA. Further, when the time charter for J/U WIND ENTERPRISE was extended it was mutually agreed with Siemens Gamesa that the day rate will increase materially from mid-2025. In summary, the contracted terms of the two long-term time charter contracts with Siemens Gamesa are, almost entirely, expected to enhance running twelve months EBITDA to around EUR 75m from mid-2025.

ZITON to explore strategic alternatives
The Board of Directors of ZITON has engaged Nomura Greentech to act as financial advisor in reviewing strategic alternatives focused on maximising shareholder value. These alternatives include, among other things, a corporate sale, a business combination or a partnership, while continuing to develop other growth opportunities. There can be no assurance that this strategic review will result in any transaction. ZITON has not set a timetable for completion of the process, and it does not intend to comment further unless a specific transaction is approved by ZITON’s Board of Directors and its shareholders, or it is otherwise determined that further disclosure is appropriate or required by law.

Read the full report