Q1 2020 Earnings Call
[music].
[noise], ladies and gentlemen, thank you for standing by welcome to the North Manpower conference call to discuss 2021st quarter results [noise].
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As a reminder, this conference is being recorded Thursday May 14, 2020 at 10 am.
Conducting this call for north manpower might qualities, President and Chief Executive Officer.
Holding I mentioned, Donny Chief Financial Officer.
And well see collegial senior director of Investor Relations and strategy.
Before we begin North Lance management has asked me to remind listeners that all figures presented or in Canadian dollars into caution it certain information presented and responses to questions may contain forward looking statements that include assumptions and are subject to various risks.
Actual results may differ materially from management is expected for forecasted results.
Please read all forward looking statements statements sections, and yesterday's news release announcing north Manpower's results and be got hit by its contents and making investment decisions are recommendations.
The release is available at Www Dot North Atlantic power Dot com.
Now I'll turn the call over to my colleagues. Please go ahead.
Thank you Lisa and good morning, everyone. We also have David powerful our executive Vice President of development, joining the call. This morning as well. So thanks, everybody for joining us today. The <unk>. This morning, we will review, our first quarter 2020 financial and operating results.
It's certainly been a busy in challenging quarter in light of the events surrounding cobot 19, and its implications not only for a company but of course for everyone globally.
Before I begin I want to take a moment to welcome Pauline Ellington, Danny our new Chief Financial Officer. This is Pauline first call as CFO since joining Northland on April 13th we are excited to work with Pauline who comes from a fast growing complex development company has deep experience in corporate finance strategy capital allocation.
Project Development Finance in addition to financial reporting Treasury attacks I think I got all of that probably [laughter]. She is an excellent find and everybody at Northland, It's very happy that that she's joining the company also joining us on the call for one last time as Paul Bradley are retiring C.
So who you all know well of course, [laughter], Paul and I have crossed paths in many ways in the Ontario power sector over the years I always enjoyed dealing with him and it is one of the high points in my career that I was able to work side by side with them over the last five years.
Those on the call no Paul deep knowledge of the power sector and the success of course with Northland, but you may not know what a great mentor. He has been to so many people at the company Paul I wish you the best in what looks like quite a busy retirement.
I also want to thank you for staying on until today to support the transition.
Now turning to the quarter, we're off to a very good starting 2020, I will provide a high level overview of our first quarter results in Pauline and will provide a more detailed look into the financials later in the call.
We once again delivered very strong financial results achieving healthy growth in both adjusted EBITDA and free cash flow per share compared to the same period a year ago.
Operationally our teams worked tirelessly to ensure that our facilities continue to operate safely and efficiently. Despite the events related to the cold at 19 pandemic.
All our operating facilities continue to operate as expected and preventative measures remain in place in accordance with North plans crisis response plan and applicable government directives.
Most of North times revenue is under long term contracts. Nevertheless, the situation remains dynamic and we continue to track development is very closely and May take further actions as may be required.
Turning to our financial results for the first quarter, we reported adjusted EBITDA of approximately $421 million compared to $294 million in the same period in 2019, representing a 43% increase year over year.
Our free cash free cash flow per share in the first quarter was $1.10 per share compared to 79 cents per share in 2019, representing an increase of 39% year over year.
I'd like to point out the significant increases in adjusted EBITDA and free cash flow are largely due to stronger operating results from our offshore wind farms as well as contributions from Deutsche boot.
Partially offset by greater periods of unpaid curtailment due to negative pricing at North sea went into each boot.
Well the majority of our offshore wind revenues are contracted under long term agreements. We do have some limited exposure to the wholesale market freaks out with electricity, if low market prices persist for an extended period North times revenues will be negatively affected.
We saw some impact of this in Q1 already as I said at North Sea, one and Deutsche.
Strategically.
We delivered on several initiatives during the quarter that will position us for further growth <unk> successfully closed the acquisition of our first electricity distribution utility Epsa in early January and our first quarter results incorporate contributions from Epsa and were in line with our expectations.
Deutsche booked we achieved a significant milestone on March 31st where all of the terms required to satisfy the project lenders for term conversion were achieved and we officially commissioned the 252 megawatt facility.
It's officially ends the construction of the project.
As announced in early March the decision was made to for go the installation of the two Mano bucket Foundation turbines and leave the project to be comprised of the 31 model pilot Foundation turbines.
This decision allowed us to move the project commercial operations on March 30, Onest 2020.
This is our third European offshore wind project to be completed in the North Sea. In addition to Gemini and North Sea one.
Three projects I have a combined gross capacity of nearly 1.2, gigawatts or approximately 900 megawatts net to Northland and speak to north times ability to try and track record to deliver large complex projects.
Deutsche Food will allow us to meet the power needs of approximately 300000 households, and the renewable energy produced will save an estimated 700000 tons of greenhouse gas emissions per year.
At dilute your construction activities continue and the project remains on track for completion in the second half of 2020.
However, completion timing may be affected by availability of construction subcontractors should restrictions under cobot 19 persist for an extended period of time.
At this point activities continue and as I said, we're still expecting completion later this year.
As part of our development strategy in Mexico into the end to facilitate securing offtake agreements for Lucero, we completed the acquisition of a qualified supplier in Mexico, we call NP energy.
The energy as well, which holds a qualified supplier license will enable nor Atlanta operating the electricity section Mexico by contracting our generation facilities, including my Lu Chen to commercial and industrial off takers.
We have highlighted previously Northland owns 100% of literature and is our first project to be underpinned by commercial and industrial offtake, we expect to secure off take agreements for the project closer to project completion.
Now turning to our development activities, we continue to expand our pipeline activity by establishing several early stage development project in new jurisdictions, we announced the acquisition of night Qunar in March and offshore wind project off the coast of British Columbia.
We also completed the acquisition of data Ocean, an offshore wind development company in South Korea with identified development potential of approximately one gigawatt.
Both of these projects are early stage development opportunities that will expand our offshore wind portfolio and will further diversify our portfolio.
We expect to develop these projects in the coming years.
At a high long offshore wind project in Taiwan work continues on securing power purchase agreements for the remaining 744 megawatt allocations secured under an auction process and expect to sign the PPA in 2020.
As we continued to take advantage of a global increase in demand for renewable energy projects, we will continue to leverage our competitive advantages in order to meet our ambitious growth plans.
I will now turn the call over to Pauline for more detailed view review of our financial results.
Thank you, Mike and good morning, everyone I'm very happy to be here at my first quarterly conference call as Chief Financial Officer last night, North and released operating and financial results for the first quarter of 2020 Threes result, showcase the continued strength and resilience of our business. Despite the ongoing implications as coal that 19.
We generated adjusted EBITDA of $421 million in the first quarter, which was an increase of $127 million or 43% from a year ago. The primary driver behind this increase was strong operational performance at our offshore wind farms, where we saw a combined increase in adjusted.
EBITDA Gemini and North Sea, one of approximately $33 million and the additional contributions from <unk>, which contributed approximately $85 million at Preqin completion revenues in the quarter.
Also contributing to this strong performance in adjusted EBITDA was the addition of financial contribution from as fast as noted earlier, we closed on I've sat on January 14, and as a result $21 million in adjusted EBITDA was recorded in the quarter.
These strong results were slightly offset by lower resources at our onshore renewable facilities and a higher level of development spend it's primarily related to our high long offshore wind project.
With respect to free cash flow Northland generated a total of $211 million in the first quarter. This represents an increase of 49% or $70 million from the prior year.
The increase in quarterly cash flow is attributable to a $48 million, increasing overall earnings resulting from the stronger performance in our offshore wind segment as Mike mentioned earlier.
As Mike Olson mentioned, we declared commercial operations at <unk> at the end of March the project earned pre completion revenues until achieving financial completion.
This time any net pre completion revenues in excess it via not required to service that was recognized as free cash flow. This amounted to $93 million in the quarter. The total amount of contribution from DB. It for 2020 is expected to be in line with guidance released in February which for clarity included this onetime then.
Okay and included and it seems that we're successful.
And making only partial year debt repayments in 2020.
These higher contributions were partially offset by a 37 million dollar increase and scheduled principal repayments primarily related to deal and the first principal debt repayment at Grand spend.
Another offset with a 28 million dollar increase in cash tax expense, primarily due to the addition of epsa as well as higher cash taxes at our offshore wind facilities, including Gemini, which became fully taxable in 2020.
Lastly, as we stated in our guidance, we expect higher development costs in 2020, as we pursue growth opportunities development costs, including overhead accounted for approximately six cents a free cash flow per share in the corner within guidance our development budget for 2020 currently remains unchanged.
These figures translated to the free cash flow for share of one dollar and 10 cents for the first quarter, representing an increase of 39% compared to the prior year.
This level of cash flow resulted in a rolling four quarter free cash flow parent ratio calculated on a cash dividend basis at 58% compared to 64% last year.
With respect to our financing activities on May 11, we successfully completed the early redemption ever 4.75% series C convertible debentures originally due June thirtyth.
The $148.8 million of principal outstanding hundred $47 million worth it did ventures were converted into approximately 6.8 million shares with the remaining nominal amount redeemed in cash.
We ended the quarter with over 420 million of cash and liquidity available comprised of 84 million of cash on hand, and 339 million of liquidity under our revolver.
As we have noted earlier our business strategy remains focused on enabling us to meet our commitment to our shareholders. Despite the implications of Copel 19, the strength of our balance sheet and stability of our cash flows which are underpinned by long term revenue contracts positions us to whether the current environment.
While we had a strong quarter or 2020 guidance remains unchanged at this time, we continue to expect adjusted EBITDA in the range of 1.1 billion to $1.2 billion and expect free cash flow per share to be in the range of $1.70 cents to $2.05 per share.
Want to take a moment however to expand on deep you debt assumptions that are included within our guidance with the completion of construction and commercial operations being achieved we are working to restructure the projects 1.47 billion Euro senior debt and hope to have this completed by the end of the year.
For Twentytwenty the project will habits first Samuel semi annual debt repayment in June for approximately 46 million euros, but we expect to defer the second payments scheduled for December into 2021 with the completion of the restructuring.
The payment in June has been evenly amortized and free cash flow between Q1 in Q2 and the amount of approximately 18 cents per share per quarter. The deferral of the second payment is embedded within our guidance assumption.
Prior to concluding my comments I would like to thank Paul badly for his guidance during my transition period I'm excited to be part of Northland and Im inheriting a strong team and infrastructure due to Paul's leadership, Paul. Thank you I wish you. The best of luck in your retirement and look forward staying in touch with you for a long time to come with that I will now.
During the call back over to make for his concluding comments.
Thank you Pauline in closing I want to highlight what that while our primary focus during these times is the health and safety of our employees and all stakeholders. We also feel a great sense of responsibility to continue delivering electricity under our long term off take agreements in concessions many of Northland facilities are deemed critical infrastructure.
Sure for example in northern Europe, our offshore wind projects provide over one gigawatt of capacity.
Scott you on our power plants generate a significant portion of that provinces energy and absa. The solar is a solar electricity distributor.
In Colombia boycott region.
Our efforts are focused on ensuring our facilities continue to operate at high levels of availability delivering the essential power that are offtake counterparties rely on and need.
We have ample liquidity strong balance sheet and given the relative stability of our revenues and free cash flow profile. We're in a good position to whether the current environment.
Lastly by leveraging our financial flexibility extensive development expertise and knowledge, we will look to identify and develop future opportunities to further expand our global development footprint and enhanced north times growth.
That concludes my prepared remarks, we'd now be prepared to take your questions.
Lisa Please open the queue for questions.
Thank you.
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Your first question comes on line of Sean stores with TD Securities.
Thank you good morning, congratulations to both Pauline and Paul.
Two questions on offshore wind to start with I know you guys don't provide quarterly long term average generation guidance, but.
Can you give us a sense of how Q1, north sea wind conditions, when compared to normal expectations for the quarter.
The the.
The wind speeds and would have been above above the P 50, so above expectations.
Any order of magnitude you can provide Mike.
[noise] materially above.
Got it [laughter] and operating costs for the wins PSEG offshore wind segment were up just 3 million year over year. Despite the inclusion of debut but and that could be a function I guess, if the street completion accounting.
Would you consider Q1 margins for offshore wind is representative of.
What might be normal in the first quarter.
Yeah, there was nothing out of those out of the ordinary in the first quarter in that respect so that would be a that'd be a fair assumption Sean.
Okay.
And last question for me for now.
The wind curtailments in Europe, and the lower wholesale prices for Gemini you touched on those items for Q1.
Any sense of how that's transitioned into Q2 in terms of incremental headwinds that you might see this quarter.
Something we're tracking closely.
As you can imagine so.
No, Germany, Netherlands, and most of the northern and Western Europe is now gradually opening up so we're kind of tracking.
What happens with the demand as as the factories and and offices or start to open up the this month so.
But too soon to kind of make a forecast on up but but something we're watching a watching closely in particular this month.
Okay, Thanks, Mike I'll get back into queue cut.
Your next question comes on line of David data with Raymond James.
Great. Thanks. Good morning, everyone. My first question here on the acquisition of enter here in Mexico I'm. Just wondering you have any details on how that qualified supplier license works and was there a pre existing business there.
It was it primarily just that license.
And maybe finally, a deep do you see bringing you any other opportunities.
Good question, so the way the electricity or system is structured in Mexico.
She is relatively new in the last a three or four years, whether the restructuring took place is that a generator cannot sell directly.
To load or to it to a customer you need to sell through a qualified supplier.
So as we were planning out our Mexican growth strategy, we had a couple options we can either.
Sleeve, it or or sell through another qualified supplier.
Create your own qualified supplier or.
Acquire or partner with an existing qualified suppliers. So what we ended up when we looked at all those different options. We decided that the there was a lot of value for us and actually controlling a qualified supplier and getting some of the rents on the on the transactions and I will also using it to help inform our development.
Activities going forward, because that that would identify where.
Load customers are looking for both generation and also are energy and capacity, but also renewable energy attributes so based on that we acquired.
A.
Company, Ridinilazole, which was in the process of securing their qualified supplier license and we didnt close until after the license had been secured and approved.
And then we are working with that team that core team, which we.
Did a lot of diligence on and have a lot of confidence in.
To build out a qualified suppliers. So it did they had they had a secured their license, but they have not yet be began operations and at that point that we stepped in and acquired them.
Turning to your second question, David starting from to your second question. David is certainly it allows us to have a path to market.
Our power from Blue Chip, but also from other facilities that we hope to develop and the construct in Mexico.
And the and that's the main purpose of of that platform for us, but it will also as as the team understands better where.
Load isn't where constraints or in the Mexico grid allow us to become better informed developers as well going forward.
Okay, great. Thank you very much that's good color and then maybe just a one other question I'm just curious that you know in the in the current environment.
Maybe are there any developers are projects out there that that could be distressed and do you see any opportunities arising from the current situation.
Just given your strong balance sheet.
Yeah. It's good question, so mandate David Paboase on the line is ahead of development and he's.
I'll turn it over to him in a second dad any any more detail on it but he is certainly very were aware of kind of that some opportunities as you describe may exist and so were attune to it and all of the regional development options are looking.
For such a such opportunities.
Having said that Oh, there is still despite everything ample.
Capital available for the renewable.
Energy sector, whether it's a certainly at the late stage.
Development of projects, but but there's also capital available for earlier stage projects as well. So we're keeping an eye open for those opportunities.
And we have been able to move.
Recently on a couple of transactions that that in our view probably were less competitive than they would have been otherwise.
And that's also a function of just the.
Those not being familiar within a an asset that needs to his transacting that the them not being able to due diligence for example on the site. So there are some opportunities like that that have come up but David anything anything you'd add to that for.
David So question, Yeah, Yep, Thanks, Mike Oh, I think they've given thing I I doubt that either.
Got you, taking a little bit at time for those things to work through what you might be and they don't to suddenly happened on on day. One is of Cobiz 19 happening. So we're starting to see a few more opportunities coming through as Mike says, we have explored some already and I think it's something that the so somebody the team is continuing to track I think we'll see things materializing.
The becoming most.
Great. Thank you appreciate those comments and congrats to Paul on the retirement and welcome to pulling.
Thank you.
Your next question comes from Nelson Ng with RBC capital markets.
Thanks, Good morning, everyone. Just a few follow up questions from Sean and ER David.
In terms of the Mexican a acquisition of energy is that business do you do you expect to see that team lines. So wholesale.
Power from Lucia and potentially other generators.
And to sell to other commercial industrial customers they are.
Standalone business.
Or do you anticipate that this is a stand alone because were.
Like Northglenn looser project, just why not.
He generators kind of eating.
Our into this.
A good questions I mean, the to be clear the mandate in the purpose of MPN are here is to facilitate our investments in renewable power facilities in Mexico.
That's the purpose of it.
In order to do that I'll give you. One example, I'm on my Lu Chen I missed the solar project.
So.
We can sell the energy we can sell the Rex, but the customer most customers industrial customers who would also.
Looking for a 724 blocker power and for capacity as well, which they need to procure in the market.
So.
The team would be certainly marketing the energy and the Rex from Lucero under under contracts to end users, but they would also be supplementing that with capacity.
And the other blocks of power that they'd secure in the market. So they can put together a more attractive or package I guess for for a lot for a load customer.
So it it enhances the value of what we're selling from our renewable energy facility. So it it facilitates I was doing let each but also will hopefully facilitate as doing more projects.
In that regard as we move forward and perhaps at some point in the future two batteries. So we would be able to.
Have our own capacity right in the market, but that we could we could sell ourselves, but that's that's.
The best way could describe how the purpose is to facilitate art investment in renewable power projects.
In order to do that there will be some other contract that will going on in the market to facilitate that.
Okay, Hello, some extent.
And then just moving over to offer wins I'm not sure whether I'm reading it right, but in terms of the a unpaid could tell me that was about 70% 70% of North Sea Wanna debut.
Does that mean that.
German power prices were.
Negative or 70, some of the time or more than negative or something.
So time.
I I don't know if that's actually a cracks me basically it the way it works its it isn't the day ahead market.
There is gonna be negative pricing for more than six hours at that point, we were vulnerable to a.
We would not be compensated for that curtailment, if it's less than six hours than we are compensated so I'm not.
But up to we can check and get back on the math on that how that works out.
The.
I can say that mean that there was that there was certainly a the issue with the demand reduction through March with the lock down.
But there was also up.
Was less demand on on gas gas prices were also low, which which inevitably works its way through into the power price in in northern Europe. So he was a bit of a bit of a perfect storm that depressed prices and create a supply demand balance.
Okay, and then just one last question before I get back in the queue.
For an artsy one send beyond settlements.
So it looks like you received 58 million euros and settlement, but I presume you up yourself perform everything.
Could you just talk about so the cost of itself performing and like this.
Like are there are short term savings.
Potentially you're kind of taking on more longer term risks.
Yeah. So we receive the 58 now and and and then in the M.D.N.A.. We also discussed that we expect 20 million that's ongoing higher operating costs. So the residual will be amortized after free cash flow.
And that's how we are accounting for that that have receipt of payment over nine years.
Got it so not not it's roughly 30 million positive or benefit.
That's correct 38, yes.
Okay, great. Thanks last I'll get back to.
Your next question comes in on line of Martin Charm, you would see I.B.C. capital markets.
Good morning, everyone. Welcome Pollina, all the best Paul and on your New Adventures.
So maybe just on M., so where you're going to put in the whole code that there's still something they'll say on the bridge you're also carry a little higher balance on a revolver. So once you put the permanent financing and you free up more corporate quantity.
Yes, that's correct. So we currently have bridge financing in place and the whole co financing will be used to to pay down it bridge facility.
Is the whole told gonna be greater than what's left on the bridge and therefore, you pay down a bit more <unk>.
At this time I I don't think we are anticipating at two.
Have any excess amounts however, we're still working through the financing and I would say that it's going well.
And we look for it to making progress on that over the next couple of months and not just out that basically the corporate financing also depends on what's coming up next so really the bridge will almost vehicle nothing happened and there's gonna be some bridge paid off with the corporate line, but going forward whatever a car next financing tends to be will probably.
Mop up any of the the details that are there. So yeah, it's it's somewhat fungible.
Okay.
And then get when when you say now with with caution in available.
Credit facility.
Do you want to hold onto a little higher balls, giving some of the concern around the world or an hour or would you be willing to put the capital work yeah near term here at the right opportunity again.
I mean, certainly always <unk> one of the advantage is that we have right. Now is is that we do have sufficient liquidity to move on a attractive development opportunities. So that is something that were.
Earlier very much attuned to and we're looking for opportunities that may be present present now that we're not present two months ago.
Okay and then.
In the Indian and talks a little bit about supply chain constraints in Taiwan, given Colvin pandemic, just maybe what's the nature of that or is it actually have any financial implications.
No I mean, I think the the the the most.
The impact of supply chain constraints in Taiwan, right now are more related to the projects that are under construction, so well we didn't.
You know plan to have the 2024 25 interconnection date on our our project who was is what happened in through the process. Obviously N.N. as we we we submitted that's how it worked out.
But looking at the situation now I think we're feeling much better that we're going to construction in 2022.
As opposed to being in construction now as you know Taiwan is probably one of two countries in the world that have managed to covert situations. So far the best and the economy never went into locked down in a in Taiwan and it is function very well and they've.
Strolled any any outbreaks that that occurred early in January very very well. So in terms of our activities. There's been no material impact as most of our activities are related to a engineering planning.
Procurement and with some work happening in the next few months to do further Jude technical investigations offshore, but we don't anticipate those being materially impacted.
Okay, that's going to here and then my last question on efforts to grow the on for an oval business and.
Port somebody goes looking at some U.S. leading projects. He's also in the past talked about northern Europe any up the views on which one of those mark it could be the for the next.
<unk> also animals, yeah, I'll turn out over to David.
Yeah, I think so I might be a good good question I <unk> I I do not want to would decide which one is going to be more attractive than the other <unk>. Some success and then in the U.S.M. I think that's <unk>, we see good opportunities to Sue and in your we're going to know.
<unk>.
I'd love that he's pursuing at the moment, so hopefully more news on that coming up in the next if it's a six months or so so I think both those markets like good opportunity school onshore wind up your specific question.
Okay, great. Thank you.
Current next question comes from Atlanta, Rupert Murmur with National Bank.
Good morning, everyone know Echo my God's relations to holding the pool.
So looking at the.
When coach I believe one of your large European cares less engage in the code check with some time.
Do you know why they were interested then and can you get some color on the progress not project or whatever the last 18 months it would make it make it more attractive.
Oh for sure. Thanks reports so.
You point out or stead and ourselves from time to time, they're they're much larger, but often we now bump up against each other in offshore wind projects.
At the time that they abandoned their involvement in like one which was which is public.
They had also at that time secured required deep water wind in the northeast to the U.S.
So I can't speak to obviously, what their motivations are and why why they make decisions, but the that was a significant acquisition for them.
And and I would imagine that a lot of the personnel that were doing north American offshore wind.
Refocused into the northeast of the U.S., which had some very imminent deadlines in terms of construction and in service dates on a on the portfolio. They acquired <unk> when they got deep water when so.
View on.
Night Coon is is perhaps a bit different than than worse dead.
Northland or has developed.
<unk> development activities in in in British Columbia.
You see I've developed and financing construct a an offshore wind project.
North tip of Vancouver Island prior to joining north Midland.
So collectively we've got I think pretty good understanding of what it will take to build a project in British Columbia, which as you probably know is is quite different from the rest of Canada. Once you get west of the Rockies a year into with different environment in terms of Ah.
The first nations, where a lot of those first nations do not have.
Operating outside of treaties with the the government of Canada. So it it's a very different relationship in in a west of the Rockies.
And requires a different approach to project development. So.
Our view as we sat in the release is that this project.
Will only move forward in concert with Haida.
Nation, and that's our first priority in terms of advancing that project is developing that relationship and building that trust.
Yeah, but once you know about the strong winds there and the conditions in the sea bad how how much like the north sea assistance or anything you'd need to do significantly different from what you've done in the past.
No. It it's technically an excellent site I mean, it I think the water depths are are somewhat less than need <unk> then in the north sea geotechnical or sea bed conditions are as good or or better a wind speeds are comparable if not slightly better. So it's an excellent.
Nickel site a bit more complexity in terms of the transmission line once you come on shore.
But otherwise it's a it's it's a very good technical site.
So that is what has.
Over the years <unk> drawn a lot of attention to that project.
But as they said that's not the the.
The key factor in advancing that project.
As with any renewable power project or any significant infrastructure projects in British Columbia. The first priority has to be working with local communities and in particular, the first nation and who's traditional territory the project will be.
Great. Thank you and secondly on on Columbia, you've now got.
Close to I guess, you have a quarter under your belt or any.
Prizes there are any refinements your strategy and talk about what you're you're next steps could be a in Colombia and does the current situation.
Impact your your strategy there at all.
Yeah, No surprises me need the Epstein performed as expected we had a very.
Positive view of the the management team going into it from or diligence process and that is only been confirmed by working with them over the last few months I think the we're we're digging in a bit deeper with them looking at growth opportunities beyond abscess current platform in that is moving along well.
So I mean, I don't know if that's surprise, but that is certainly encouraging for us, but that's about it there's no.
Material impacts with respect to <unk> on on on Epsa. The only thing to note is that the.
Drag or the regulatory approval on the appeal.
On the on the the filing is.
Is.
Allayed, roughly two months or three months from what it would've been otherwise simply because.
The government has been working for all the civil servants have been working from home. So there's been a bit of a delay there, but that's the only material impact in terms of covert 19, and and the government is taking some proactive steps to ensure liquidity in the you.
Utilities in in Columbia, as well so there's a there's been no real concern in that regard either.
Oh very good thanks very much.
<unk>.
Her next question comes from online I've been Vanwyk B.M.O. capital markets.
Okay. Thanks morning, I wanted to go back to the the Canadian project discuss with Rupert and and what are your thoughts on the ultimate counterparty on on that I could I think I didn't P.C. harder was <unk>.
<unk> backing at one point that that's not happening in any mourn and so is this really setting up for our feed at some point her time are you.
Corporate precursors or or some other avenue.
Yeah and to be clear I mean, we're not in we're not in a huge hurry on this project will move the project forward as a.
Market conditions.
To demonstrate its viability and we'll obviously trying to encourage that.
The two options are either a an off take agreement with B.C. hydro.
For a off take agreement with industrial load in that area, which would be a bit more complicated and may involve sleeve through B.C. hydro and that's dependent on the development of LNG projects in the north northwest of British Columbia.
The two two different options for for off take for for that project moving forward.
Okay.
Okay can I go to some of the commentary on on the the price impact and.
In Europe and.
Can you confirm his.
You bet I hit you guys are.
Taking their experience thing it is is that.
It seems to be greater than expected because of <unk> 19 is that is that correct.
Yes.
Okay in terms of the the impact of negative pricing yes.
Okay, and and and and I guess it seems like the you in terms of above average resources I mean look like.
Probably we already know way in in in a bag that you you benefited from above average resources. In so you you look at that and you look at the price impact. That's that's really that's what gives you confidence in your your numbers for this year, that's the right way to look at it then.
Okay, Alright, Okay, maybe I can maybe this question for perpetuating and and it's just looking at your your real estate experience in in your time, there and a lot of similarities obviously and they're not that business when you're seeing apart business respect to.
Oh, and this year will cash flow and bumping assets and creating value there and and so my question more curious as you.
<unk> gone into the north when things look that that folks and whatnot and you you see anything that looks interesting from just the conservatives on on the from the <unk> ratios it conservative or for our grass, there waiting with a balance sheet and recur in them and how do you think about how they look at international.
<unk> reward.
Hi, then.
Add nice to U.S. a few again after seven years. So I think what struck me I'll start first with what struck me at ballots at joining the company prior to being at North fun.
It is and it's very successful company. One that has you know transitions from a successful Canadian company too is successful global company <unk> you know, it's really strong track record of delivering salt Lake returns to shareholders, while achieving growth.
Now that I am here and you know I can get a better feel frame the sense of the operating team and strengthen the operations, which I think is is really critical to future success at the company and you know a strong balance sheet and whatnot and that I and you know inherit.
<unk>, but you know already working on to improve and she you know improve our liquidity and just transfer balance sheet to continue to pursue growth opportunities on a global level.
I think similar to at my past is you know nor thing is now transitioning to become a development company and a lot if the growth will be future oriented.
You know combined with near term of creative opportunities. So it's always a matter of balancing both but I and certainly excited about the challenges ahead and Guy you know <unk> engaging in a business that is pursuing both operating assets and developments in in various jurisdictions that that.
We have for building since strategic advantage and.
Long answer to your question, but I hope it answering it and now I might just chime in here, it's Paul Ah, Ben G. store or Hardball on the first [laughter] first call she's.
<unk>. So you know discover some time to kinda mold in but I, but I will tell you is I've been hugely impressed by how quickly she's come up the curve and just how extraordinarily she's going to fit in here at North and I mean I. You are you never really no, but I tell you in the last six weeks I've been convincing I'm, leaving here.
Dave's My last day with a zero worry that she isn't going to be extraordinary in the position. So you know for good good question been bit of a hardball, but yeah I I I have no doubt that she's going to take a take north into the next level.
Oh that that's that that that's great and and I was hoping I wasn't a hard ball, but uh huh.
I was about you you know I wasn't gonna, let this one go easy [laughter], Okay, well I think there, especially with a view to taken off their pollen and and congrats again and walk away.
Thank you.
The next question comes from occupied.
Oh Alliance.
Hi, Good morning, Yeah, just get your thoughts on the recent increase in Germany's offshore wind target for for 2030. The this development have any implications for your strategy in that market.
[noise] certainly we have a a large presence in in Hamburg and in northern Germany. So any further opportunity is is is positive for the growth in offshore wind as positive for us in general and make rate more opportunities. I think you you know that we have a expansion rights on.
Nor does he won in terms of North Sea, two and three which we're we're pursuing and so we'll see how it develops the the the one thing I would note though is that there is at the same time that they're proposing more off for a window Northern Germany. There was also transmission enhancements being.
Planned in implemented in Germany to facilitate the movement of power from the north to the south in south being where a lot of the industrial load as a as well there's a schedule over the next I think 15 years to gradually decommission the.
Coal generation facilities in in Germany as well.
There's a lot of moving parts as.
Some new generation comes online and other generation is taken off line and as the system also becomes more efficient as well the grid becomes more efficient.
Okay push it up shit and maybe just now that you've completed the the <unk> project can you give us your let his thoughts on the dividend policy and that have been upheld.
So that is obviously the per view of of the board as you as as you know Ah, but there is a there's no change in Ah what we've disclosed to previously in terms of dividend policy.
Okay like you I'm not <unk>, the polling and Paul.
[noise] like.
Mr. Crawling there are no further questions at this time I wouldn't know trying to call back to you.
Okay, what I was going to thank everyone for joining us today, but I was going to go slightly off script and just just as Paul's last call with North planet actually Paul's last bad Northland today.
I did want to invite them to say a couple of words since he's worked closely with any of the people on the line.
Thank you, Mike and I I want to think everybody on the call and beyond the call for your long term interest in support North and power. You know you guys are by definition have to be tough on us and that's all fair, but I. What I will say is that you've always been fair and you've always listened and you've always just really respected.
The complications that it takes to run a business and I'd want to think all of you for that and as I said earlier and repeating it because I I do feel strongly that you know, Mike and the board and and other is really found a winter and Pauline and you know I'd to some of just the depth of the conversations we've had over the last six weeks and just getting in.
To <unk> nuances appalling picked up way sooner than I would have ever expected has really given me a lot of a warm comfort that you know as I I will remain estate colder in north and for very long time to come and and I'm, just really thankful that it's in in great hands and so you know congratulations.
Pauline and I I know she's going to do fantastic and I know Mike will continue to run this company just as in the same high quality manner. The house and I know I'll be seeing most of you out in about I'm not sure to hang it up the skates totally I'm sort of hang on one of them up not both [noise]. So I will probably run into most do somewhere along the way in my travels.
Thank you.
Okay. Thanks, Paul [noise], we will hold our next call. Following the release of our second quarter 2020 results in August in the meantime, I Wanna. Thank you for your continued confidence and support take care.
Ladies and gentlemen that does.
Oh.
Thank you from Mississippi.
Hmm.
[noise] [laughter].
[music].