Mar 3, 2022
Operator
Good day and thank you for standing by. Welcome to the Technip Energies’ Full Year 2021 Results Conference Call.
At this time, all participants are in a listen-only mode. After the speaker's presentation there will be a question-and-answer session.
[Operator Instructions] Please be advised today's conference is being recorded. [Operator Instructions] Now I to hand the conference over to your speaker today, Phillip Lindsay, Investor Relations.
Please go ahead.
Phillip Lindsay
Thank you, Sarah. Hello to everyone and welcome to Technip Energies full year 2021 financial results presentation.
Today, on the call are CEO, Arnaud Pieton; and our CFO, Bruno Vibert; who will present our business and financial highlights as well as the outlook. We will also present our ESG roadmap through a short video.
And this will be followed by Q&A. Before we start, I would urge you to take note of the disclaimer and forward-looking statements on Slide 2.
I will now pass the call over to Arnaud.
Arnaud Pieton
Thank you, Phill. And welcome to our full year 2021 financial results presentation.
2021 was our first year as Technip Energies and I am extremely proud of the way that our teams have delivered despite testing external environment. This was obviously no ordinary year for any of us.
But despite the extreme challenges of the COVID pandemic, Technip Energies pulled off some real accomplishments and made an extremely strong start. Let's start with a highlight.
Operationally, our execution was solid throughout and we achieved notable progress across our portfolio. We drove double digit revenue growth year-over-year and margins at 6.5%, well ahead of our original guidance.
With a book-to-bill of 1.5%, we achieved nearly €10 billion of order intake of which 94% was outside of Russia, notably, reinforcing our positions in LNG and ethylene market. This led to a near 30% improvement in our backlog to €16.4 billion, equivalent to 2.5 times revenues and providing clear, multi-year visibility.
Based on the strength of these results, we are very pleased to announce our maiden dividend at $0.45 a share, which is subject to approval at our annual shareholder meeting in May. The dividend reflects our commitment to shareholder distributions and our confidence in our business outlook.
Finally, in line with our plans and our promises, today we have published our ESG roadmap and scorecard following an extensive exercise throughout last year. I will return to ESG later in my presentation.
Before continuing with the results presentation, let me say a few words regarding the situation in Russia and Ukraine and put our exposure into context. The company is closely monitoring the situation.
The safety of our people and their families is as always, our first priority. We are providing today a financial framework that provides transparency around contribution from Russia.
As of year-end, 23% of our backlog related to projects and our construction in Russia. This primarily relates to Arctic LNG 2, which was awarded to us in 2019.
In 2020 and 2021, nonetheless, our order intake from Russia has been no more than 6% to 8% of total orders, which will naturally lead to diminishing exposure to that geography. In terms of our P&L, in 2021, Arctic LNG 2 was at peak volumes and Russia accounted for around 35% of revenues.
However, looking at 2022, the proportion of our estimated revenue from Russia, assuming business continuity, would have lowered to 20% of the aggregated revenues and trend down further in 2023 and beyond. And in EBIT terms we expect any potential impact to be even less as Russia was estimated to contribute only 15% of our EBIT.
As Bruno will discuss later on, what this means is that our 2022 EBIT margin should remain broadly in line with 2021, regardless of our exposure to Russia. This is supported by our long experience of managing contracts in difficult and complex environments.
We understand the contractual mechanisms and protections, which are crucial to mitigate risk and to sustain the performance of the company. Our contracting discipline ensures positive cash.
And if the situation requires, for example, under suspension or termination situations, we would have the means to demobilize and pay our subcontractors all without negative financial exposure. We are financially robust with gross cash of €3.8 billion and liquidity of €4.5 billion.
As evidenced by the dividend we are proposing today, our capital allocation framework is intact, and we clearly have the capacity and ambition to invest in our strategy. In summary, Technip Energies is far from a pure Russian LNG play.
We are global geographically diverse company with an energy transition strategy, and this is more relevant than ever as the current situation will likely accelerate the energy independence and energy transition agenda, notably in Europe. Turning to our operations, we delivered fourth quarter revenue growth of 10% year-over-year with an excellent performance from Technology, Products & Services, TPS, as well as continued momentum in projects delivery.
This really represents strong progress despite the challenging environment related to the pandemic with our operational teams continuing to rise to the challenge. Turning to our commercial highlights, the fourth quarter saw us secure multiple strategically important awards in both TPS and projects delivery and notably in the domains of carbon capture, sustainable chemistry and ethylene.
In the carbon capture market, our co-investment alongside our partner, Shell for the Cansolv technology has started to yield success. In the UK Technip Energies is leading the consortium alongside Shell and GE Gas Power for BP’s Net Zero Teesside project, where we are performing a fit competition for power station with two million tons per annum of carbon capture facility.
And we are also supporting Shell on other projects in the UK and the U.S. In addition, the Ghasha mega project in the UAE, will see us design a carbon capture unit to be integrated into the development.
This is yet another example of how traditional industries are also decarbonizing. Turning to sustainable chemistry, our PMC team has been awarded FEED and early EPC services for £100 million Wastefront recycling plant in the UK with a capacity to process 80,000 tons per annum of used tires.
We also entered into a strategic partnership with Wastefront to deploy their unique circular model globally. Our proprietary Hummingbird technology continues to enjoy success in the renewable fuel domain with field studies awarded by LanzaJet for two near identical sustainable aviation fuel units in the UK and the Netherlands.
Finally, in project delivery, the Borouge 4 project is a substantial EPC award and a particularly pleasing win as a strength of our technology offering yielded the strongest life of project economies. In summary, a positive conclusion to a very successful year commercially for Technip Energies.
Before handing over to Bruno, I want to say a bit more about our commercial model, because it's really at the heart of how we manage the business and what sets us apart. In addition to our well-known selectivity criteria in the past year, we have added ESG as a key metric.
This means that we assess a project’s potential to integrate sustainable development and contribute to the Paris goals. We promote decarbonized solution in frontend design and tender phases and ensure we are mitigating environmental impact.
And we will scrutinize whether it meets our high compliance and government standards. Turning now to our ground rules, being engaged early, meaning 10 executing the FEED study, gives us the chance to define and optimize a project’s scope.
This considerably derisks execution as well as ensuring economic viability. And this early engagement is a prerequisite for us when bidding on any large-scale EPC with lump-sum content.
Let me repeat, we will not enter into large EPC projects without it. Beyond early engagement, it's all about discipline in our contractual negotiations.
Every contractual framework has to be compliant with our risk management policy and ensure that we are rewarded for the risk we take and protected from risks beyond our control. Supported by our asset lite model at Technip Energies there is no such thing as a must win project.
We continue to mitigate risk and exposure throughout the contractual phase, notably in procurement. When we can contracts, we also sign back-to-back with our supply chain to ensure that a very large proportion of our costs are locked in at the point of signature.
When it's not possible to do this, we use escalation clauses, or go reimbursable. And we consistently meet our progress our portfolio through monthly project management reviews with intense focus on project progress and cash flow.
So, in summary, our disciplined commercial approach reduces risks, ensures quality of backlog and provides consistency in performance. And we're confident this discipline will serve us well as we embark on our energy transition journey and enter new markets.
I will now turn the call to Bruno to discuss our financial performance in more detail.
Bruno Vibert
Thanks, Arnaud. And good afternoon, everyone.
So, turning to the highlights around financial performance for 2021, adjusted revenues grew by 11% year-on-year to €6.7 billion with strong activity levels overall, including solid growth for product delivery and an excellent performance for technology products and services where revenues grew by over 20%. Adjusted recurring EBIT was €431 million equating to a margin of 6.5%.
That's a 60-basis point improvement versus 2020, benefiting from strong execution on projects heading towards completion, as well as a higher activity level and a federal mix in TPS. Bottom line is also very strong with adjusted net profit 20% higher than the prior year at €251 million.
Adjusted order intake were at €9.8 billion, a significant improvement versus a €4.3 billion in 2020, leading to a book-to-bill of 1.5. Net cash at period end was €3.1 billion.
In summary, a very robust first year for Technip Energies as an independent company. Turning to our segment reporting and starting with Projects Delivery.
With the pandemic continuing to present challenges through the year, which included the patchwork of varying local COVID restrictions as well as constraints around logistics. 2021 was not an easy environment to achieve growth in a project business.
So, all credits to our teams would help deliver an impressive 8% growth year-over-year to €5.4 billion, benefiting from significant activity on Arctic LNG 2, and the ramp-up of recently awarded LNG and downstream projects. This more than offset lower contributions from downstream projects in more mature phase.
Adjusted EBIT for the segment was €342.0 million equating to a margin of 6.4%, quite stable year-over-year. It is worth noting, however, that the 2020 margins excluded COVID costs.
Whereas in 2021, we absorbed such costs into our recurring EBIT. Therefore, on a like-for-like basis, margins were actually up about 50 basis points.
Book-to-bill for the year was strong at 1.6 and benefiting from the substantial award of Borouge in the fourth quarter, as well as Qatar NFE in the first quarter. Backlog ended up 30% year-over-year.
So overall a robust and a robust margin performance by product delivery. Turning to technology, products and services, TPS, closed 2021 very strongly hosting, very high fourth quarter revenues growth and double-digit margins.
When combined, with the momentum established in the first nine months, the segment delivered full year revenue growth of 23% to €1.3 billion. Growth was broad based benefiting from good demand for Engineering and P&C services, sustained process technology activity, including licensing and proprietary equipment, and good activity in systems in Loading Systems which continues to benefit from a sustained period of strong order intake.
EBIT margins improved by over 110 basis points to 9.2% benefiting from higher activity levels overall and a favorable mix. Thanks to strong revenue in margins EBIT in absolute terms increased by close to 40%.
And encouragingly GPS orders more than kept pace with the growth in revenues leading to a backlog growth of 13% to €1.2 billion Turning to other key performance items across our financial statements. Beginning with the income statement.
Corporate costs of €30 million substantially lower compared to 2020, owing to a streamlined corporate structure and the achievement of our 20% cost reduction target for SG&A, which we mentioned during the last Capital Markets Day in February. At around 30%, the effective tax rate is at the low end of our full year guidance due to favorable earnings mix, as well as discrete favorable returns to provisions.
Dividend distribution of €0.45 per share, this fulfills our commitment to start a recurring and stable dividend. It also reflects real confidence in our future, given our backlog and the rich opportunities.
Looking ahead our intent is to provide us sustainable dividend for our shareholders. And this distribution follows a path of a balanced and flexible capital allocation framework, which also includes investment for growth and balance sheet strengthening.
Turning to balance sheet. With gross debt, largely unchanged on prior quarters, strong free cash has enabled our net cash balance to go to grow to 3.1 billion.
Net cash is now greater than the net contract liability, which itself is stable to slightly down from the prior quarter. So, let's dive now further into cash flows.
2021 is a very strong year with free cash flow reaching 943 million. Three main factors at play.
Firstly, a consistently strong underlying level of cash flow generation through the year as we executed across our portfolio. Secondly, a significant working capital inflow of 626 million, creating to customer advances provision to do awards and key milestone achievements on other large projects as well as project related working capital valuations.
Finally, capital expenditure of 50 million, where key items are spent included IT infrastructure to support growth and other investment supporting our Energy Transition strategy. With overall free cash flow equivalent to about 95% of our operating cash flow.
This clearly illustrates yet again, the asset-light nature of our business model. Excluding working capital movements, cash conversion from EBIT is also very high, above 75% for the full year.
And over the long-term, we expect to be able to deliver a consistently high free cash conversion net of working capital in a 70 plus range. Below free cash flow there is nothing incrementally material to what we disclosed in our Q3 report.
And we end the period with nearly 3.8 billion of cash and cash equivalent. Turning now to our financial framework for 2022, where we are providing a very transparent view of projected contributions in relation to revenue and EBIT from Russia.
Given our backlog at the inception of the year, as well as a diverse commercial opportunity set, we were well positioned to build on from the momentum establish in 2021. For revenues excluding the contribution of Russian projects currently in execution, and which will be impacted by the ongoing crisis we are projecting a range of EUR4 billion to EUR5.5 billion, a step up from the 2021 levels as shown earlier by Arnaud, notably due to the ramp up of projects awarded during the year 2021.
At the start of the year, we were projecting approximately 1.4 billion for projects currently in execution in Russia, most notably Article LNG 2, about 20% of the aggregate amount and a clear reduction versus 2021 demonstrating the happy diversification of our portfolio. In terms of margins for activities excluding Russian project in execution, we see a margin of at least 6.5%, which clearly sets some continuity versus a solid 2021 performance and a 60 plus basis points minimum increase versus a 2020 performance.
Some moving parts to consider here: First, we expect to sustain momentum and our strategy growth focused in technology, product and services. A segment that is accretive to a group margin as shown by the 9% plus full year 2021 profitability.
Second, will continue to benefit from our SG&A cost-based reduction primarily in cost structure. Third, on the project side, while good execution will provide benefits from project maturing and moving towards completion, we will also have a proportion of our revenues from earlier phase projects, such as Qatar NFE, Costa Sul and obviously [indiscernible].
The final factor is Yamal, where we expect the last remaining portion of the contract liability to unwind in 2022. We do not see any specific exposure arising from the current situation.
In top of this projection, the estimated EBIT contributions from projects currently in execution in Russia, is below 17 million. This is approximately 50% of the aggregated expected EBIT, down from a 20% share in 2021.
And this reduction is largely due to the declining revenue contribution as Arctic LNG 2 revenues picked in 2021, and will decline significantly in 2022, with the trend continuing in 2023 and beyond. To conclude on tax, the trend is lower than we originally anticipated for 2021, and we expect an effective tax rate on an adjusted basis of 28% to 32%.
We believe we can sustain the effective tax rate on a similar range for the medium term. I will now pass it back to Arnaud, for the outlook and ESG.
Arnaud Pieton
Thanks, Bruno. Our business outlook and guidance are further supported by an improving macro-outlook where we see a strengthening across the majority of our market.
While there is geopolitical uncertainty in the near-term, our markets are rapidly evolving, driven by several major global factors. Growth in energy demand with an increasing need for low carbon and carbon free energies, our traditional customers transforming and becoming active players in the energy transition, new clients and new business models are emerging and political and economic agendas are accelerating towards a carbon neutral economy.
Our core business remains strong and increasingly requires innovation to de-carbonize. Beyond traditional markets a very different future lies ahead with massive electrification and ever momentum around secular clean fuels and carbon free solutions.
This positive backdrop is translating into an exciting pipeline of opportunities for 2022 and 2023. In total, we are tracking more than EUR60 billion of prospects outside of Russia, this includes a substantial pipeline of convent market projects.
The majority of which have a de-carbonization element. The LNG opportunity set remains significant, and we believe we are aligned with prospects of high quality with strong economic foundations across many geographies.
Furthermore, we fully expect this opportunity set to grow as the current crises will likely accelerate the energy independence and energy transition agenda. The world's climate ambitions are having great influence on our business.
In 2021, we were awarded over 150 contracts of various sizes across the Energy Transition domain with 45% year-over-year. While most of these are in study phase, many prospects are maturing, and we currently see a two-year Energy Transition related commercial pipeline excluding LNG and excluding Russia of EUR8 billion.
Further we should see an infection in Energy Transition FIDs in 2022, and an acceleration in 2023. Selectivity will be just as important in these new energy markets with opportunities in both TPS and project delivery, allowing for meaningful backlog additions in the next years.
In summary, a very positive outlook across the majority of our market, our ambition is really to sustain our leadership in our core businesses and to be a leader in the new markets. Turning now to ESG.
At Technip Energies we believe our role goes beyond business. Our purpose is to break boundaries together to engineer a sustainable future.
We believe that to overcome the challenges the world is facing we need to work more closely together. Thanks to our people, technologies, strong legacy and capabilities we can help transform the energy world, we can foster a sustainable industry ecosystem, and really, we can unleash talent to resolve complex challenges.
Our ESG journey has had active participation of our people and external stakeholders. Coming together with a shared sense of responsibility to design a robust and ambitious ESG roadmap together by T.EN.
Together by T.EN is driven by four strategic pillars: drive solutions for the climate, enable people to thrive, lead responsibly and collaborate to impact. With these four pillars we aim to translate the priorities of today into tangible actions for a better tomorrow.
We now play a short mission that illustrates our ESG priorities, targets and strategy in more detail. [Video Presentation] ESG for Technip Energies is about acknowledging our responsibility to create value and positive impact our applied our people and our stakeholders, which in turn contributes to our company's long-term sustainable success.
Our ESG scorecard, a summary of which is presented here is how we translate our commitments into actions and the way we measure our ESG performance. The scorecard encapsulates targets across our ESG pillars with most targets centered on 2025.
Picking out a few, we are committed to cutting emissions at scale with robust reduction targets aligned with the – to the Paris agreement. We will commit to a science-based target in 2022 targeting a 30% reduction in scope 1 & 2 emissions by 2025 and net zero by 2030.
We will also report our Scope 3 emissions from 2023 and allocate 100% of our R&D spend to our energy transition strategy. As part of our diversity priorities, we are targeting 25% of women in leadership positions by 2025.
This is broadly in line with the female population of our company, which will grow as we continue to onboard and retain 50% of women in our yearly graduate intake. We aim to reinforce accountability through implementing ESG linked compensation for the Board of Directors, CEO, Executive Committee and all eligible employees.
This way we ensure that ESG matters are overseen at all levels of our organization. Really with this presentation, we have summarized our ESG roadmap, but we have also published an extensive and detailed ESG slide pack that can be found on our website In summary, with our 2021 full year results we delivered strong year-over-year growth in revenues, margins and free cash flows and excellent performance in a testing environment and fully supportive of our first dividend.
With the delivery of our roadmap, we are integrated ESG into our strategy and our business strategy and will ensure that all future investments are fully aligned to our Energy Transition domains. In spite of geopolitical uncertainty, we are delivering confident and transparent guidance for 2022, which demonstrates the robustness of our business model.
And we believe the current crisis will likely accelerate the Energy Transition and energy independence agenda, and we are ready to capitalize on this. And with that let's open the line for questions.
Operator
Thank you. [Operator Instructions] The first question today comes from the line of James Thompson from J.P.
Morgan. Please go ahead.
James Thompson
Great. Thank you very much.
Good afternoon, James. Thanks very much for the presentation.
Obviously just wanted to ask really around Russia, I really appreciate the guidance that we've got for 2022 and beyond. I just wondered could you maybe just update us really on where you're at with Arctic LNG 2.
Are you expecting to sort of call force majeure in the coming weeks? Could you maybe sort of talk to us around the process there?
And then also Bruno, just in terms of the NCL associated with Arctic LNG 2 and sort of what the costs might be to effectively unwind that project in terms of the amount of activity you're going to be doing in the next couple of months. So just some further color if you can give it to us around that project and the status, et cetera in this, obviously very tricky time?
Arnaud Pieton
Yes. James, thank you for question I will start and then the question I will start and hand over to Bruno.
So, you see Russia, Ukraine and the whole situation around Ukraine created as you may imagine. I would say immediate mobilization of the team here including the – of course, the executive committee on a daily basis, we activated our crisis management team to monitor the situation.
Primarily focusing as you know on the safety of our people and their family, so we basically spend some time establishing processes and protocols in order to ensure we mapped everyone. And we had every evacuation option as necessary and if necessary, going forward.
So, this is really now behind us and I'm happy to report this is the cure. Now in terms of the update on Russia and Arctic LNG 2 in particular, I shall start by reminding everyone of the current, I would say status of the project.
Arctic LNG 2 is composed of three mega trains, three GBS. The modules are fabricated mostly in China.
All the modules for the first GBS are either first train have been delivered to Russia and are being integrated onto GBS Number 1. So, I would say most everything that is needed in terms of the big modules is in Russia and actually on GBS1 are being integrated on GPS1.
So, the question is obviously about what's coming next and we are absolutely still assessing the situation, which as you may imagine is very fluid in terms of the dos and don'ts – the operational dos and don'ts. So, it's a process that is ongoing.
We are in daily contact with our partners and our clients. It is too early for me to say, and for us to say with precisely what is going to be the future of the project and how it can progress, if it can progress.
As you may imagine, yes, we are being impeded by the circumstances around this act of war that has – that is taking place in Ukraine, and we are assessing to see how we can work with it or not. And this is done openly with the client, which is facing the same challenges as we are.
So, it's a dialogue that we are having with them at the moment. We probably provide more clarity around that in the coming weeks or next time we speak.
But it's very free and it's keeping the project busy at the moment together with the client and all parties have to come together in order to assess what can or cannot be done in the current circumstances. As my answer would be a bit long, but I think it's important that I stated.
As an experienced EPC contractor, obviously our contracts include the protections required to address all scenarios including protection against sanction and/or false measure provisions. The most important at the moment is that we continue the data with the client, and we engage with them and just as we expect from – just as we expect from our customers, we comply with all provisions of the contract, and we will enforce our rights as appropriate in the circumstances and in the manner that are most protective and advantages for Technip Energies.
So, this is where we are at the moment and we are – it's a constant engagement with the teams on onsite, the logistics team and the client. Bruno?
Bruno Vibert
Yes. Thanks, Arnaud.
Hey James.
James Thompson
Hi.
Bruno Vibert
So maybe take a step back as you know, and we say always said that we operate with the positive cash flow as part of our selected – part of the mitigation. And obviously, this is the case for Arctic LNG 2, not an exception and the project is cash flow positive, very cash flow positive that means we have cash on our balance sheet offset by the NCL as you suggest.
Very important also almost the entire cash is outside Russia, in solid banks fully accessible to us. So, cash availability not a problem, cash, is not a risk.
So, to go back to your question on how this unfolds on balance sheet? Well, sorry for that maybe today, but not a single answer or set timing.
Obviously, a lot will depend on the sequence, the timing, the chain of events, many different potential scenarios can arise from this, let's say, dynamic situation, which was described by Arnaud. At the end of the day, if we were to go to termination what would be required?
Would be to close out POs or to transfer POs to close out, to transfer subcontracts and so on. And as this is done, yes, you would suppose that this will mean some cash out, some cash developments.
And at the same time, there will be a decrease in advances and working capital. So, reduction in gross cash, but net of the advances on the other side of the balance sheet, quite neutral, so no exposure there.
James Thompson
Okay. That's very helpful.
I'd just say it's situated obviously developing as we speak. If I could just sort of move away to the rest of the business, obviously we would have expected some orders in Russia in 2022 and 2023 and you kind of give us an idea there.
Could you maybe just curious into what's sort of on the plate in the first half of 2022? And obviously it's an improving backdrop, and your clients might be looking to move forward projects elsewhere.
So maybe just help us understand whether you could actually replace that potential order intake this year?
Arnaud Pieton
Yes. So I think I'm not going to concentrate too much on the first half, I'm going to concentrate on the – on the pipeline, as some of – some of those projects are – they take a long time to negotiate and then they can – they can come in one length and – so it's whether they happen within the Q2 or within the Q4 or just on early January the following year, it doesn't matter too much for us.
This is why we're not totally obsessed by the quarterly order intake, but in terms of providing color for what is available out there. So first of all, I think that the current situation is just going to accelerate an LNG cycle.
We have more than a single opportunity for – I mean several other LNG projects out there. You would be aware of where we are active and in Qatar as well as other countries.
So, there's additional energy capacity that is – that is coming. We can clearly see, I would say – I would say a high level of motivation by some of our customers to, I would say be active in the conversion of those prospects into projects.
It's happening in areas like Qatar, but not only certainly in North America as well. And so, we're quite confident in the rich nature of the pipeline around LNG, and notably also because yes, there is – LNG is probably more flexible than gas in the pipeline it's very, very, very evident now.
And therefore, the advantages of LNG are playing today even more than ever. And what is very interesting about LNG is that the prospects we're seeing are about mega trains were also midsized development, and all electrified for most of them in the future.
So that's obviously very interesting because it tackles LNG as an energy source, but also certainly supporting our strategic positioning and Energy Transition agenda. The future LNG infrastructure would be electrified and would be – would be zero carbon.
There is also an acceleration around the things like ethylene, which is a GDP growth base product and prospects. So, after a very slow and low COVID period in terms of order intake around the ethylene, we clearly see an acceleration in 2022 and 2023, so that is certainly on our agenda.
And like I indicated in the year, there is, I would say an Energy Transition agenda that is accelerating or content that is accelerating still not totally at the size of mega LNG projects, but it's becoming now very meaningful in sizes. And that's around carbon capture in particular, CCS projects, and I have listed a few.
So really the – of course there's a part of the pipeline will be amputated by what could have happened in Russia around LNG in particular. But there is more than enough for us to concentrate on.
We anyway would not have pursued everything we have in the pipeline. So, it would've been part of our selectivity criteria, so there's more enough for some strong building blocks in the future in terms of order intake.
James Thompson
Great. Thank you.
Operator
Thank you. [Operator Instructions] The next is from the line of Bertrand Hodée from Kepler.
Please go ahead.
Bertrand Hodée
Hi. Thank you for taking my question.
Two, if I may. The first one, can you provide a bit more caller on Arctic 2 in terms of cash and associated net contract liabilities for the contract on your balance sheet at the end of 2021?
And how many people from Technip Energies are involved currently in the project, Arctic 2. And in case of, I would say termination would you be able to present rapidly on other projects?
That is my first question.
Phillip Lindsay
That's two questions, in one question. Thanks, Bertrand.
I will start with, I mean, answering the people question and hand over to Bruno for the cash and NCL at the end of 2021.
Arnaud Pieton
You [indiscernible] like the answer. I mean, all right, more seriously, we currently have a bit less than 700 people in Russia.
Russia for us is obviously Arctic LNG 2 as a project, but we also have two permanent offices, one in the Moscow and one in the Saint Petersburg. Those people are active on Russian new projects, but like any engineering office we have around the world, they're active on projects or international projects.
So, they serve beyond Russian projects. So that's basically the – the Technip Energies population we have.
And in terms of the population, we have on the project staff working on the project, not only in Russia, but between Paris and the China and Russia. We have around 400 people on Arctic LNG 2 project.
Obviously, we have a lot more contracted, but they are, I would say less of a concern when it comes to relocating them or relocating resources to other projects. So, as you may imagine relocating 400 or 450 staff personnel from Arctic LNG 2 project and two other opportunities is almost gymnastics that we are used to doing, I would say on – maybe not on a quarterly basis but certainly twice a year as our projects complete and we demobilize.
And so, it's a regular exercise that we are conducting in the company, and I'm very happy to report that, I mean, we have plenty to do that can keep those 400 plus people busy including in LNG prospects and other ventures, which are actually beyond LNG and the traditional market. So, there's absolutely no anxiety around our ability if necessary to use those people and relocate them into opportunities that will represent more of the future for Technip Energies.
Bruno?
Bruno Vibert
Yes, thanks, Arnaud. [Indiscernible].
So, more color for cash, obviously, you know large projects, such as Arctic very fluid and from week-to-week or from month-to-month, the disease can change. Obviously, I won't give you an exact figure of amount, very, very fluid, and as it will change as we continue the project in the following days in the following week.
What I can say of course is the project is positive, very solidly cash flow positive. And as you know, it's commensurate, basically, with our operations is what our commitment also to the supply chain, to the subcontractors.
So yes, we have a large amount of cash on the balance TPS? Is it in line with let's say a usual contract of this nature?
Yes, and will be totally in line with some of our commitment if we needed to enter some closeout, but obviously, today, the product is still going on. So, there are still cash in.
There are still disbursement. So, it's a topic which is on a constant monitoring as other things.
Bertrand Hodée
Thank you. And I forgot to congratulate you on your very strong Q4 and also for the transparency and your Russia exposure, as well as the very comprehensive 2022 guidance with or without Russia?
My second question relates to LNG opportunities in the U.S. In the past you've refrained from taking us LNG liquefaction contract, and my opinion you were right to do so, given the intern construction risk in the U.S.
But are you in discussion or early involvement with potential U.S. energy project to be sanctioned this year or next year?
And are you confident that the U.S. energy promoters will go to the modularity and to the modular concept, that was by example, very successful on Yamal?
Arnaud Pieton
So, thank you for the question. And I think there is most of answer in your question.
So, there is – so yes, it would be a short answer. Yes, we are engaged with developers of midscale LNG in the U.S., in north America.
And as we engage with them, I want to reassure everyone on the call, we are engaging with those developers on only the basis that we would be delivering a solution that is modular. So, we are not engaging with LNG developers who are not interested to accept our modular and fully electrified LNG solution.
So, that's yes, we are engaged, but we are engaged with a single product. It's a modular one and it's an electrified one.
The advantage of the modularization, which – and you are right to ask the question about whether it's going to be accepted there. But there is an interest, and this is why we are engaging.
It's only on the basis of modularization. First of all, the modules are a lot smaller because we're talking small scale or mid-scale LNG versus large scale trains in other areas of the world.
And by modularizing, you are basically shrinking, I would say, the construction cost by local contractors and reducing the scope to, I would say, civil work, and interconnections and things like that that are probably a lot less risky than stick building LNG trains in along the Gulf Coast of the U.S. So again, for us, we are doing it because we are basically it's modular, it's a single product modular and electrified, it's no lump sum construction risk.
So, we are finding a partner which is ready to take lump sum construction scope and is ready to do so because the scope is not much smaller as explained because it's basically mostly civil work and interconnection. So even for that partner, I would say, the risk profile is much lower than it becomes acceptable for him to accept a back-to-back lump sum.
So those are the conditions under which we are engaging with a few LNG developers in the U.S.
Bertrand Hodée
Many thanks.
Operator
Thank you. The next question is from the line of Øystein Vaagen form Fearnley Securities.
Please go ahead.
Øystein Vaagen
Hi, thank you. I just have a quick question on the 2023 backlog, which is now at roughly €4.4 billion.
You've previously been quite forward leaning on order intake expectations for 2022. And then my question is if you can give some color or if you expect a lot of that order intake to have a large 2023 portion of working included in it.
Arnaud Pieton
Thanks, Øystein for the question. So typically, as you know, when we secure projects – I mean, if I take project delivery, first of all, projects within project delivery if they are signed in 2022, as you know considering the nature of the project, there will be a gradual ramp up.
And depending on when they are signed in 2022, they will have an impact on 2023 revenue, but certainly not the full breadth of an impact. The peak of revenue for project signed in 2022 will occur in 2024 and 2025.
So, there will be maybe somewhat of a lower contribution to revenue in 2023 that's a fact of life when it comes to project delivery. But beyond project delivery, there's also TPS, or Technology, Products & Services for which we are also expecting growth in 2023 versus 2022 TPS has a much shorter book and turn if I may say.
And therefore, it will contribute positively to the revenue level we will see in 2023. So that's what I would say.
And again, I will repeat what I said a bit earlier. Some of the projects are large in nature.
What matters to us is not so much whether they are signed in November 2022 versus January 2023, is that they are signed in the right conditions. And it's okay if they are delayed by two, three months.
And they are signed and secured in 2023 versus 2022, that is not absolutely an obsession. And yes, so that's how I would characterize the dynamic at the moment.
Øystein Vaagen
Perfect, thank you. And then just one last clarification is just on Yamal.
Could you just clarify if Yamal is outside the guided EBIT impacts from Russia? And also, that most cash share is already on your books and that there is no more Russia activity here, if I'm correct.
Arnaud Pieton
Yes, Øystein, I can take this one. So, Yamal the cash is on balance sheet.
No further invoicing to be made on that. No one on site.
Totally the end of the warranty period. So that's why for us we do not consider Yamal to be in any of this, given the current evolution and the current crisis.
So that's why we haven't excluded Yamal from the projects, from the eyes of the portfolio. And so, Yamal is not included in the Russian project in execution because we consider that it’s done from this respect.
Øystein Vaagen
Understood, perfect. Thank you.
Arnaud Pieton
Thank you.
Operator
Thank you. The next question is from the line of Sasikanth Chilukuru from Morgan Stanley.
Please go ahead.
Sasikanth Chilukuru
Hi. thanks for taking my questions.
I had two related ones, please. The first was regarding the balance sheet strength, your net cash position improved quarter-on-quarter, and now you are in a net cash position, even after taking into account the net contract liabilities.
In this context, I was just wondering what you think is the right level of net debt or net cash position for Technip Energies. Related to this if you can give us any guidance or color on your expectations of working capital, excluding Russia, of course, in 2022.
Bruno Vibert
Thanks, Sasi. So, obviously it's going to be a bit of a potentially volatile year in terms of working capital, depending on what happens on Arctic as I was saying earlier to James.
In terms of cash, cash is associated to the project evolution. So, today, as I was saying, we are very comfortable with the cash position of Arctic just as we are very comfortable with the cash position and the positive cash flow of any other project.
So here we are positive and that's why Arnaud was mentioning earlier that we have the full confidence to deploy our strategy to continue to invest increase R&D, make acquisition just as we've had for [indiscernible] floating offshore wind or hydrogen over the last couple of weeks. So, we have the ability to do that, we have the ability to pay dividend.
So that's why we are, I would say, very comfortable with this level of cash which gives us this flexibility plus, of course, is associated and basically secure our risk on the project. Now in of cashflow, from next year, well, obviously, setting aside Arctic, which I have kind of discussed, we would see a more stable and neutral cash flow for the rest of the portfolio versus 2021, which was quite positive.
Here, I think within the project more later stage, mid-cycle or early stage. And of course, we don't control the FID timing.
We will expect to have a much more, let's say, neutral cash flow impact on a full year basis. And that means also, of course, we continue with the fact that excluding working capital variances, the net conversion of the EBIT to net cash will still be very positive.
Sasikanth Chilukuru
Great. Thank you.
Operator
Thank you. The next question is from the line of Mick Pickup from Barclays.
Please go ahead.
Mick Pickup
Good afternoon, everybody. Couple of questions if I may.
Firstly, thank you for talking about how your contracts are protected against price inflation. But obviously there seems to be inflation across the whole market.
Can you just talk to how your clients are thinking about that in the moment? Are you worried that project bids, when they do go in, might be too high for your clients?
Or is there an urgency for your clients to accelerate at the moment?
Arnaud Pieton
Yes, Mick thanks for the question. So, it depends on the clients we're talking to, those with which – with whom, sorry we have, I would say, ongoing ventures, it is likely, you have to imagine that we have – through the ongoing venture, sorry, probably options at secure price for some of the equipment.
So, if we were to go into a subsequent phase with them what we would have to do is simply activate and trigger the options that we've got through the supply chain at fixed prices. So, that's one example.
For the customers with whom we don't necessarily have, I would say, an ongoing project or – of similar nature, and we go greenfield. Well, we are being absolutely transparent with them with regard to where the cost growth is coming from.
So, it's by playing this transparency that we are able to find other solutions either by, I would say, enlarging the approved vendor list and finding our – I mean, alternatives, sorry, sources of supplies. And so, really through being transparent that we are addressing the situation.
So, there's really no panic. It's a conversation.
And that's, I would say, the beauty of, I would say, our early engagement principle. It's giving us an opportunity to find solutions together.
So, for now I haven't seen – we haven't seen a project which would have gone back onto a shelf just, I mean, simply because of inflation reasons. The conversations are, okay, how do we go about that?
What do we do? What solutions do we find?
Very often, we can find solutions between the design basis that maybe is a bit rich, and ways we can we actually help them lower the CapEx and their OpEx altogether. And let's not forget as well that inflation is not happening across the board.
Indeed, there is some, but we have areas on material, et cetera, where there's a bit of a reflex.
Mick Pickup
Okay. And can I ask secondly about hydrogen conversations.
Clearly, you've got a very strong position when it comes to potential blue hydrogen, projects with the way gas prices have gone for the last six months, I assume most conversations aren't what they are. What are the conversations on hydrogen at the moment?
Arnaud Pieton
So, yes, the conversations we're having on hydrogen at the moment, on blue hydrogen, they remain – I mean the several prospects we've got in the pipeline around blue hydrogen, those remain active. They are obviously taking place with those customers who have, I would say, reservoirs compatible with CO2 sequestration.
So, with those who have gas and reservoirs compatible with CO2 sequestration the conversations are pursuing, progressing. And we haven't seen any decline or reduction of pace in the conversation simply, or just because of the gas price that is very high.
And therefore, they would be tempted to reallocate gas to, I mean, something else than blue hydrogen. So, at this stage, it's not the case.
And conversations are pursuing with those with gas reserves and suitable reservoirs, notably in northern Europe, there are still, I would say, a strong motivation and attraction for this solution while working on green hydrogen as well. So that's our experience at the moment Mick.
Mick Pickup
Okay. Thank you very much, cheers.
Operator
Thank you. And the last question today is from the line of Jamie Franklin from Jefferies.
Please go ahead.
Jamie Franklin
Hi guys. Well done on 2021 results.
And thank you for taking my questions.
Arnaud Pieton
Thank you.
Jamie Franklin
So, most of my questions have been answered, but just one. I appreciate that you can't provide a specific value for Arctic 2, but can you update us on approximately how much of the €3.8 billion cash is JV cash year-end and how much is unrestricted?
Bruno Vibert
So, yes, Jamie. So of course, all the cash, even in joint venture is not restricted I mean we don't have lines or restrictions associated to that.
Of course, it's associated to the project just as it will be for most of the other projects it was in a specific entity. In terms of exact split, I won't give you this, but yes, the project cash in joint venture where we have the largest project is significant in the terms.
So, it's not minor within the total pool, but the full amount of cash accessible through cash flow, through cash pool, and so on, is again also very significant. So, I think, both are significant in this respect and really give us the opportunity to have this cash management and this flexibility that we can have from a day-to-day perspective operating.
Jamie Franklin
Okay, understood. Thank you.
Operator
Thank you. That was the last question.
So, I'll now hand back to the speakers.
Arnaud Pieton
That concludes today's call. For any follow-up questions, please contact the IR team.
Thank you. And goodbye.
Operator
Thank you. That does conclude the conference for today.
Thank you for participating. You may now disconnect.