Good morning, everybody. We are here today to talk about the Q3 and give you a presentation. We will start with Richard Olav Aa, our CEO for Bonheur. But before I give the word to you, Richard, I would like to tell you that as we usually do, the CEOs will perform, will talk about the different areas, and we will then do the Q&A at the very end. So, Richard, the word is yours.
Yeah. Thank you, Anette, and also hearty welcome, from me, to this Q3 presentation. So if we could, go to the first slide. Before we go into the slide, I think I would like to emphasize three important facts in this quarter that are items we have worked on for a long time, and which is coming to fruition this quarter, before we go into the numbers. I would like to highlight on renewable energy.
There we see a significant revenue decline due to lower power prices of 72% on revenues. On the prices, while revenues are only dropping 45%, and that is due to a concerted effort, a commercial effort in, Fred. Olsen Renewables on working on the other revenue streams. I'll come back to that, but how they have worked now on dismantling the old PPAs and work to get more out of the ROCs, the REGOs, and also how the planned curtailment and maintenance is really paying off on the revenues.
Just one thing we'll come back to. And on wind service, Fred. Olsen Windcarrier worked hard and long in Japan with Shimizu, and this quarter it's coming through with two contracts on what we now call our fourth vessel outside Japan s o another achievement in this quarter. And thirdly, on cruise, the countercyclical move, acquiring two cruise ships in the midst of COVID, we see is now really paying off, and the customers really love the two new vessels, and we see that in the results.
I n all areas, we see that, some long-term, bets we have taken on working more commercial in renewable energy, working consistently with our Japanese partner and, taking a countercyclical move in cruise is now really starting to pay off. So with that as a backdrop for the results, we'll go into the numbers.
We see despite the steep, drop in power prices, revenues are on par with Q3, last year, around NOK 2.3 billion, while EBITDA is down from NOK 1,083 million, down to NOK 800 million this quarter, mainly due to the drop in the electricity prices. So I'll go through area by area. Renewable energy has a drop from NOK 748 million in Q3 last year to NOK 243 million this quarter.
That is a drop of more than NOK 500 million. I'll come back to that. It's mainly driven by the power prices, which on average is 72% lower than Q3 last year. It's a drop in all markets, but in particular, UK and Norway. But this has been offset by a lot of positive factors that I'll come back to.
Then, on construction, Ivar will come back to also that, Fäbodliden II is on track. And then Ivar will cover the tax situation in Norway, also in his presentation. But we also got another setback this quarter from the government, that the government has delayed the offshore wind application processes for both Sørlige Nordsjø and Utsira Nord, which Lars will come back to in his presentation. So some headwinds on the renewable energy development in, in Norway.
Wind Service and EBITDA almost on par with a record high Q3 last year, NOK 399 million. Tern vessels had close to 100% utilization. Some hiccups on the cranes had a slightly less than full commercial utilization. Alexandra will come back to that. Backlog without the Shimizu contracts is at NOK 512 million, and then we have got two contracts now with Shimizu that both now come in this quarter and also next year, which Alexandra will cover in more detail, but again, a great achievement.
Global Wind Service had a quarter in line with the Q3 last year, with solid performance in Europe and Asia, while more struggling in the US. I think this quarter, on the result, a really positive surprise in a way, is cruise, that goes from -NOK 42 million EBITDA last year to +NOK 213 million. And who believed, two years ago, that the cruise results would be almost on par with the renewable energy results? That's how things swings and also the benefit of being diversified.
Three ships, occupancy of 76%, compared to 59% of full capacity. Still, still lower than previous years before COVID, but a solid improvement from Q3 last year. Pricing is stable from Q3, 189 per passenger. And we also got some help of reduced bunker costs, especially the diesel prices, were sky high last summer, and that's come down, this summer.
Other investments, EBITDA of NOK -55 million, down from 42 million NOK. Little weaker results in NHST, and also some more spending on Fred. Olsen 1848. We had a successful placement of a new bond of NOK 600 million that we did in the quarter.
Yeah, and then on the parent company, equity ratio of 71.5%, which is a solid improvement from Q3 last year. And also cash in the parent stands strong at close to NOK 2.9 billion. Already comment on revenues and EBITDA, but we have the high price levies in the UK with NOK 26 million this quarter. You may ask why we get that when the prices are so low. That's because we accrue on a quarterly basis, the full year estimated impact.
We see forward prices for Q4 are up, so that means that we have to accrue more on the high price levies. Whether or not that will be paid in tax, we will see when the year is over. On EBIT, we see some big swings on both depreciation and impairment. Depreciation is down because we impaired cruise lines last year, so impairments are down with NOK 73 million-- No, depreciation is down with NOK 73 million, while impairments is significantly lower because we impaired cruise lines two ships in the cruise lines last quarter, with NOK 416 million improvement on impairment.
The small impairments we have this quarter is related to NHST and two projects in Scotland on renewables. So actually, EBIT is improving by NOK 207 million this quarter. Then we need to spend a little bit of time on net finance, because there we get the opposite effect with a swing of close to NOK 600 million. We had a very strong result on net finance Q3 last year. Most of these are unrealized effects while this quarter we have the opposite effects.
W e have reconciled that on the right hand, and we can see net interest cost is actually down, despite that interests are increasing. That's because we have a lot of cash that we get better interest on, and that a lot of our debt is fixed interest. So where we get the swing is in exchange rate differences. Q3 last year, the krona weakened quite a bit, so our cash positions increased in value. This quarter, the krona has strengthened, so we get the opposite effect.
Then the biggest swing is on unrealized losses on financial instrument, where we had a gain of NOK 391 million Q3 last year. This is related to the interest swaps in U.K. So when the interest rate goes up, we get a significant unrealized gain on these swaps of NOK 391 million Q3 last year, while they were quite stable Q3 this year s o a small loss of NOK 6 million.
Then we have some liquid shares that had a loss in Q3 last year, that had a gain Q3 this year, and then some other financial items b ut the main effect this quarter is related to currency and that we didn't have the effect on the interest rate swaps in renewables. So we get a loss of NOK 211 million compared to a gain of NOK 387 million.
Taxes, nothing special to report, and the net result stands at 172, and we see most of the result in this quarter goes to the shareholders of the parent company, because we generate, profits where Bonheur owns 100%. We also see that the interest-bearing debt, net interest-bearing debt is down significantly year-over-year by close to NOK 1.9 billion.
Yeah, the revenues, we already commented on the drop in the prices and, and the improved, revenues on cruise. We can move on to EBITDA. If we go to renewable energy, which is down NOK 505 million, and actually, it could have been down more, but the really strong effort by the commercial team and operational team in renewable energy, how they have managed to dismantle the PPAs and get more paid for the ROCs, get more paid for the REGOs, how they then plan maintenance and curtailments in a way, so we get better results out of that.
Have resulted in a lot less decline on the revenues and EBITDA than we would have else. It's also been a quarter with a lot of planned maintenance and some unplanned maintenance that hit the OpEx in this quarter. On the Cruise, EBITDA of NOK 255 million, it's driven mainly by occupancy, but also the lower bunker prices. So those are the big effects on the EBITDA this quarter.
Yeah, on the capitalization, we can comment first on the 100% owned entity. We see now that Renewable Energy outside the joint ventures sits with more than NOK 1 billion in cash. That is really the dividends that come up from the joint venture due to the strong results the last quarters. Wind Service is generating good cash inflow, and also now have a cash position close to the debt position. And very positive, Cruise now have NOK 400 million in cash, which is more than the seller credit to Carnival.
A ll the units we own 100% are actually net cash positive in some, and almost all of them are almost cash positive in individually. And Bonheur ASA, close to NOK 3 billion, which is more than the debt of NOK 2.8 billion. So 100% controlled entities sits with a cash of close to NOK 4.9 billion, compared to an external debt of NOK 3.6 million s o a solid position.
In the joint venture and not fully controlled entities, we have the joint the three joint ventures in in renewable energy, where we have project finance in the UK joint venture of NOK 5.5 billion, and a cash position of NOK 0.5 billion spread around the UK joint venture and the Norwegian and Swedish joint ventures. Wind Service has about NOK 491 million in cash, while external debt is NOK 1.11 million. We are further strengthening our capitalization on the 100% owned entity and continue to have the appropriate leverage where we don't own 100%. By that, I think, I can hand back to you, Anette.
Okay. The deeper dives into the different companies, we will today start with you, Ivar. Ivar Brandvold is Co-CEO of Fred. Olsen Renewables. Ivar?
Thank you, and good morning to everybody. I'll cover the development, construction, market, and tax in my presentation. If you look at the development side, we're working diligently in all aspects and the whole value chain of development.
There is not really any change on the producing assets. It's the same as before. When it comes to Fävaliden II, that is now in the completion phase, and I will get back to that. When we're looking at the consented sites, there is a change since last time, and that is that the capacity on the Rothes III has been increased from 170 to 193 MW, and that is due to extra grid capacity being secured in the quarter. When it comes to the development activity in the early stages, there are some changes, but in all, we are working on the portfolio of four gigawatts in the development phase.
If you then look at the market, you could say that over these last two years, and we have been in an extraordinary situation, and we are more back to a normal situation as we speak. If you look at the drivers, the gas price has come down quite significantly in this last during 2023, on the back of storage being secured, and also the transformation to receiving more LNG in Europe, and hence making Europe less reliable on the Russian gas.
Quite an extraordinary change, I would say, in Europe over so few months, but nevertheless, that is the situation going forward. And you can also see that, the coal prices are coming down also to more normalized levels, whereas the CO2 pricing is staying stable around EUR 80, 80-100, which, of course, is a real important instrument in terms of, in terms of maintaining focus on the renewable, new, new, renewable energy being developed.
I f you then look at Scandinavia, the hydrological balance is now about normal. So all in all, we are now entering into the winter season in a more, should we say, a strong level than we have been in the past. We can then also see that the prices in all our markets have come down significantly since the peak in 2022, and we expect some volatility going forward, and of course, weather dependency is always there.
We are nearing completion when it comes to the third site being constructed in northern Sweden. It's the Fävåliden II. There are two large turbines being installed. They are installed, and testing is now ongoing, and we expect the project to be completed by the end of Q4, hopefully before Christmas this year, and the project has been progressing on budget and on plan.
To the last topic of significance, and that is the introduction of a resource rent tax in Norway. This was proposed a year ago by the government to be implemented on the onshore wind industry in Norway, and it was a public hearing on. That was introduced on the 16 December, and following the public hearing, or should we say the consultation process, the government decided to delay the introduction of a resource rent tax until 2024.
T hat was now proposed in conjunction with the national budget, early October, and also as a proposition or a proposal to the Parliament, which is then being progressed or processed this fall in parallel to the, to the national budget. There is just minor changes, basically, from what was proposed last year and what is now being proposed. So last year it was in the, resource rent of 40% being proposed.
There was a high price contribution introduced at 23%, above EUR 70 per kWh, and there was some production fee that was increased, proposed to be increased from EUR 10-20 per kWh, and then there was also a natural resource tax introduced of EUR 13 . In the new proposal, the resource rent tax has been reduced to 35%.... and the production, price contribution has been canceled from 2024 going forward, which was expected.
T hen when it comes to the production fee, that is proposed to be increased, increased to 23 øre, and then the natural resource tax to be canceled. In addition, the government are introducing what they call generous transition measures. Basically, they are the same as was also in the original outlines, so not really any changes there. So the material change is the resource rent being reduced from 40%-35%.
We are working consistently on this topic and communicating to politicians and stakeholders, and also documenting through the through analysis and reports, that there is not really any basis for a resource rent tax on onshore wind in Norway. I think that stands really concrete, and I must also say undisputed, also demonstrated by the recent analysis undertaken by Statistics Norway.
T he position in Fred. Olsen Renewables, which is consistent with the position in the industry, is that there is no basis for a resource rent on land wind in Norway, and also that, the proposed tax would have very negative consequences in terms of investments in renewable energy in Norway, also spilling over to, future solar and also offshore wind, and of course, also in terms of onshore wind going forward. And of course, also, Norway as a stable, having a stable regime and being investor-friendly is really at stake here.
If it is going to be implemented, the position is that it should not have an effect of existing wind farms, and it should be introduced under the same umbrella as the petroleum and also the hydro, that it should be cash neutral, and a negative resource rent should be paid in cash at the start. That has been the position of the company, that has been the position of the industry over this entire year, and it is still the position. Thank you.
Very loud and clear, Ivar, and you will all understand that we feel strongly about this point. Next, Lars Bender, responsible for Fred. Olsen Seawind. Lars?
Thank you. Yes, and I will give you an overview of the activities in Fred. Olsen Seawind in Q3, and I will start by giving you an overview of our core markets and core projects, and then I'll say a bit about the general situation in offshore wind, which has been, I think, in many newspapers over the last months. But to start with our activities, if we start in Ireland, as you're aware, we won a CFD in May on the Codling Wind Farm project. That's CFD for 1,300 MW.
We were naturally, and we are very excited about that and very happy about that. Next phase of the project have now begun, which is preparing the project for the consent application. That has been undertaking for quite a number of years, but we are looking to submit a consent application in 2024, first half of 2024. So that is very much what is progressing now. In addition to that, we are overall getting the project ready for a later FID, which means that procurement activities and engineering activities are ramping up.
O verall, the project is on track for a consent application, and the project also remains on track despite current market challenges that we see in offshore wind. I will come a bit back to that later. If we then turn to Scotland and our Muir Mhòr project . That project has been from the get-go, and this is to take a fast track towards consent application. We are still pursuing that track.
That means that we have, over the last months, collected data on site in relation to geophysical, seabed data, wave data, and wind data. That is more or less finalized now, and we've begun the analysis of that data, which will inform our consent application, which we expect to submit in 2024.
T he project remains on track to submit an early consent application and also to protect its position as one of the first movers for floating wind in Scotland, and again, protect the position of being one of the projects with a potential of being the first one of the first commercial-scale floating wind projects in the world.
If we then turn to Norway, as Richard already said in the beginning, we've had a setback in this quarter. I would say actually two setbacks, because we've had two delays over the last months. First, the original dates in August, September, was delayed until November, and then just last week, we had yet another delay of the submission dates.
O verall, of course, it's fair to say that is both, of course, disappointing. We've been preparing for this for a number of years. We've been working closely together with our partners to prepare for this, and naturally, we had hoped that these timelines would go through, and that we would see a submission this year. What the new framework actually means is still very early to answer because it came out last week. Some of the issues relate to European legislation. But we are naturally monitoring this very closely, and looking what it means for both Utsira Nord and Sørlige Nordsjø II going forward.
If we then turn to kind of the general offshore wind market, I think it's fair to say that the news over the last months have been dominated by a lot of, to some extent, negative news around offshore wind projects. There's been news around projects being either put on hold or even canceled due to poor project economics. We've seen it in the U.S., but we've also, to some extent, seen it in Europe. I think before going into the detail of what is challenging the industry right now, it may be important to remember the backdrop of the long-term picture for offshore wind.
I think we are coming from a situation where we, over the last years, have more than doubled the installations of offshore wind. We are a significantly growing industry, and also when you look at the outlook, both up against 2030, but also 2050, it is a significant growth path that the industry is on, and that picture still remains the same.
I t's also clear that some of that growth is short-term challenged by, you can say, to some extent, growth pains. And if we look at what's challenged the industry right now, it's probably two things. It's the general market environment, which relates to inflation and interest rates, and then second, it is growth pains, which is related to supply chain.
I f you look a bit closer on those two, I think some projects have had a challenge over the last months, that they have locked in CFDs at a time with a different assumption, both in relation to interest rates, but also in relation to supply chain. And that's probably what's driving the main challenges right now for some of the projects which are put on hold or canceled.
I think it's important to say that from our perspective and our project portfolio, we are not in the same situation where we have projects that we see are not economically viable. We have a very solid portfolio of projects, and we still remain on track with developing them. And we are probably less impacted by these factors than other players in the industry right now.
That doesn't mean that we should not take the supply chain challenges in the industry very seriously. We definitely should. And we are, of course, working very closely both together with our partners and the project teams on securing that we do not see impacts on our activities. O verall, as of today, we do not see an impact on our business or our projects, and we remain on track to develop those, and also maintain a positive outlook for offshore wind long-term, even though we do see some short-term challenges. Thank you.
Thank you, Lars. So challenging times, but lots of opportunities. Next is Sofie Olsen Jebsen, responsible for Fred. Olsen 1848.
Thank you. I would like to give you an update on the different technologies that we're developing. Firstly, to start off with, the floating maintenance solution, which is the solution where we do maintenance on-site on the floating wind turbines in order not to have to tow them to shore, which is not an optimal solution. There is a crane solution lifted onto the foundation, and then maintenance is performed when they have the same movements.
We are working together with Fred. Olsen Windcarrier on this solution, as they see this as an interesting solution for the future. We're currently working on a feed study detailing all the operational, technical, and commercial properties, but also adjusting the feed study to account for the trend in the market, where we see that developers are looking more at 20 MW + size turbines instead of the 15 MW turbines.
Also, the Brunel floating foundation is going along. The design scope is progressing well. This is the foundation based on steel tubulars, where the thinking has been that we would like to tap into the tubular supply chain, where monopiles wind towers are produced, and where we could then have the benefits of the cost outs that have been done in these production lines, and also be able to produce enough foundations for the large wind parks that will be there in the future, floating.
There are some benefits with regards to power production as well that we are currently seeing. It looks like it will be 1.5%, which will be a good result, and the foundation also has a maintenance solution. It's the same crane as you saw on the previous slide.
The Brunel maintenance solution, however, is slightly more elegant, as the crane is placed on a barge, slide it over the pontoons of the foundation, as you see on the lower picture, and then jacked up on the foundation to then have the same movements when you perform the blade exchange. Also working on a pilot project for Brunel, which is, of course, a very important part to test the supply chain. I would like to go a bit more in depth on Boletta, the floating solar technology that we're working on. The other two are on floating wind, so we have a film to show you. Please show the film.
With a focus on developing tomorrow's energy technologies to shape a sustainable future, Fred. Olsen 1848 is proud to introduce Boletta. A pioneering floating photovoltaic technology with a robust design, Boletta is the solution for unlocking the potential of floating offshore solar. The need for more renewable energy, coupled with land scarcity, makes it vital to tap into the ocean. Boletta unlocks this potential in a wide range of offshore areas globally.
In harsher conditions, floating PV systems have had challenges surviving the environmental forces. Boletta solves this by following the motion of the ocean. The design allows the PV modules to move freely and independently within a pre-tensioned rope mesh, while the environmental forces are taken up by the mesh and mooring system. Boletta is built on existing and proven technology, allowing flexibility in sourcing and local content maximization.
With sustainability in focus, all components in the system are tagged and can easily be recycled after decommissioning. As the main assembly is performed at sea, the need for space and infrastructure on land is limited, allowing Boletta to be installed in a wide range of locations.
Boletta offers a robust solution for operations and maintenance. The operations and maintenance catamaran has access through the pathways between the solar panels. The catamaran enables component exchange and maintenance directly from the vessel. Boletta's modular design is suitable for a wide range of commercial applications. The design is easily scalable and can be tailored to each individual project. Boletta, unlocking the potential of floating offshore solar.
Y ou now got an introduction to our floating solar technology, Boletta, which we are currently installing a pilot of outside of Risør in Norway. Very excited about this technology and the pilot. The pilot, as you see on the picture, is the same size as one football field, just to give you an impression of the size here. We are also working with DNV to get the concept verification t his will, of course, be very important going forward-
-and doing lots of design optimizations on all the different parts the pilot consists of. The floater, where the solar panels is lying on, the roadblocks, et cetera, everything has to be optimized to provide a optimized and cost-efficient product. So we are currently also planning on a 3 MW unit. That will be the commercial product that we will offer to the market. That will be the size of 10 football fields, just to give you an impression. We have lots of interest from all the major developers within floating solar. That was the introduction or update I wanted to give you today. Thank you.
Usually, Sofie, you talk about the name, 1848, and I think, just as a small reminder, 1848 was the year that Fred. Olsen and Company was incepted, and, it's nice to reflect that we are still in our 175 year. W ith that, thank you, Sofie. And Alexandra. Alexandra Koefoed is responsible for Fred. Olsen Windcarrier.
Good morning. A gain, I showed this picture last quarter. It's a pretty picture, so I think you, you can see it once more. Q3 for Wind Carrier, it's been a busy quarter. All four wind carrier vessels have been installing turbines for the full quarter, which is exactly what we would like to do. And as Richard has already mentioned, I think the, the big news in the quarter is that our partnership with Shimizu, initiated back in 2021, has come to fruition, and actually, by the, the end of the quarter, she went on contract.
Where the, the agreement is that any work outside Japan, we have an exclusivity agreement with Shimizu, which means we will market and be the contracting party. So we have the contract with the end client and then a back-to-back contract with Shimizu. So I think that's the big news for the quarter.
N ext slide. In terms of results, solid contract coverage, 100% utilization on the fully controlled vessels in the quarter. We have had some unplanned maintenance, and that's been preventative maintenance to make sure that we don't have larger incidents on the crane and also partly on the jacking system on Blue. So it just boils down to safety first and making sure that we take care of our assets, which has led to a commercial uptime of 91.4% on the fleet in the quarter. That's less than we usually have. Normal numbers for full week is 98% to 99% .
T hen, we had the partnership with Shimizu, and starting on a contract, twentieth of September. So at the very end of the quarter, we went on contract with Ørsted on the Shimizu vessel. So a good quarter. Revenue of NOK 53.1 million and EBITDA of NOK 29.4 million. So, so far, a good year and still a quarter to go before the end of the year...
B acklog in terms of forward controlled vessels, we have now split the backlog into forward control vessels and the Shimizu vessel, Blue Wind. And the reasoning for that is there's a difference in the EBITDA margins on this backlog. The forward control vessels, of course, we have a larger EBITDA margin because we have the CapEx investment in those vessels, while on the Blue Wind vessel, we don't own the vessel, we are simply the contracting counterparty.
W e think it's prudent to split up these backlogs so that we don't mislead the market in terms of that they will generate the same margin. So for forward control vessels, the backlog is now NOK 512 million. So completed work on ongoing projects, and we have still some additional work related to existing contracts added in the quarter. And then for the Blue Wind, the Shimizu vessel, we now have a revenue backlog of EUR 134 million. Some of that was a reservation agreement that we have talked about previously for 2024, but also a significant contract for Q4 2023.
On tendering activity, again, Lars talked about sort of, bottleneck in the supply chain, and I guess we see that from the other, other side in terms of market tightening, from some of our competitors have announced some really good contracts in the last couple of weeks. And we also see a high interest from clients to secure long-term capacity, both in T&I and O&M. So, we have a very positive outlook for the future. Thank you.
Thank you. We now open up for questions.
I think we should just comment on cruise, Anette.
Oh, sorry.
Yeah.
I always forget.
Yeah.
Sorry, Richard. Good to remind me.
Yeah. Now, we should just some remarks on the cruise in the quarter. And also, before I hand back to Anette, to give you a little bit of a heads up time. Last time we had the presentation, we had some problems with the Q&A, so we encourage people to have question to start announcing that to the organizer as early as now. But we'll come back to that.
But cruise, a good result, one of the absolute better results that we have had in cruise lines over the years. A positive EBITDA of NOK 213 million. All three ships operated well in the quarter. Good technical performance. Braemar is in layup and still up for sale.
Occupancy was up significantly, which is the main driver of the improved result from 59% in Q3 last year to 76% this quarter this year. 76%, could it be better? Yes, it could absolutely be better t he ships have a—all the three ships have a capacity around 1,300 passengers. We have been sailing this summer with the two new ships, around 1,000 passengers around on average. The ships could definitely take more passenger and still be very comfortable.
The guest feedback, we measure that very regularly, is really good and improving, especially on the two newest vessels. Ticket income is not up NOK 189 million compared to NOK 188 million. We have prioritized occupancy as that is a very good level of driving profitability. But we have also to shift, maybe in the future, a little bit more focus on how we can drive per diems C ruise lines have, over the years, been able to drive per diems up significantly after the financial crisis, but a little bit of a flattish development from 2002 to 2003, on the back of a significant improvement in occupancy.
Bunker cost from the same quarter is down by GBP 7.4 million. We work very systematically to drive down bunker cost to optimize the itineraries, optimize how we use the engines, thinking about new designs of propellers and painting and what have you.
T he main driver this quarter is the drop in the diesel prices, and it's maybe especially in the UK. Last Q3 last year, the diesel prices in the UK just skyrocketed with problems with Brexit and everything, and they don't have any refineries really longer that supply the UK. So diesel in the UK, Q3 last year was really bad, and good improvement this quarter s o almost NOK 100 million improvement from diesel.
Continue to see improved booking numbers. We were afraid that the strong bookings we had were a little bit of an aftermath from COVID and pent-up demand. Still see strong bookings from the UK, despite the high interest rates and inflation and so on.
F inally, we welcome a new CEO in Cruise Lines, Samantha Stimpson, which comes with 25 years of experience from the travel industry. She has basically covered all positions in the travel except the finance position, but it brings a lot of commercial experience that hopefully can continue to drive the performance of Cruise Lines further in the right direction. I mean, that's Anette, I hand it back to you.
Thank you. We are, of course, very happy that the ships are now back sailing, and and there is a lot of focus in how to now promote the product and bring cruise very much towards a in good position in the marketplace. N ow, questions and answers.
If you would like to ask a question, please press star followed by the number one on your telephone keypad. We'll pause for a moment to compile the Q&A roster. Your first question comes from the line of Anders Rosenlund from SEB. Please go ahead. Your line is open.
Thank you. I guess that was close enough. Could you just walk us through the yard stay for the installation vessels in 2024? What's the plan, and what's the number of vessel days which are not effectively being marketed?
Yeah. Alexandra, you are the best one to answer here.
No, it's, it's correct. So you've been following us for a while. W e have a major yard stay coming up on Brave Tern in 2024, where she will undergo the same conversion as Bold Tern did last year. So, Brave Tern will be out of the market for approximately six months. I n 2024, in terms of reserve capacity to sell to the market, that there's very limited. Looking into 2025, we do have some spare capacity, which we look at as an opportunity in the current market.
Just to understand, when we start looking at 2024, is that from, say, January first, or is it... Where during 2024 will the vessel be out? Which quarters will be affected?
First half of 2024. So Q1 and Q2.
Excellent. And in 2026, are you planning conversion in 2026 as well on the last vessel?
That's still not decided. Blue Tern is the last vessel where we haven't made a financial investment decision in terms of when she will be upgraded. T hat's really down to what kind of contracts c urrently, we have managed to close good contracts on Blue Tern without a conversion, and as long as we can do that, I think that will be status quo.
Okay, thank you. I'll get back in line, unless there's questions.
Your next question comes from the line of Sindre Ertvaag from Arctic. Please go ahead. Your line is open.
Yes, hi, good morning. Just two questions from my side. Could you explain a little more about your curtailment in, I guess, it's got on over 60 megawatt hours. Why is that, and is that an issue we might see come in the future as well?
Ivar, do you want to give an answer, or, Richard?
Yeah, definitely, I can try. I mean, we see in all our markets that the grid capacity is a big constraint, and we also see it on offshore wind, that the governments are really struggling to build enough grid and transfer capacity. It goes both onshore and offshore, and we have it in Norway, we have it in Sweden, and we have it in Scotland. The systems for how the curtailments are done are different from markets to markets. W e have seen in all our markets that we have curtailments t his quarter, it's especially related to Sweden and Scotland.
We try the best we can to plan maintenance and work with the regulator to do this in an efficient way for the regulator and ourselves, and some of them, the curtailment, we get them compensated for s o that is some counter effect to the lower production this quarter.
Okay, thanks. Secondly, you briefly commented that the tax rate was very high, and looking at the figures for renewables, I mean, it's like more than 100% tax rate. Does that have something in the quarter? Does that something to have to do with that, to have the windfall tax as an operating expenditure and that you have corrected prior periods, or could you just elaborate a little on the tax rate?
Yeah. Well, a very good question, Sindre. The way the tax calculation is done in Bonheur UK is an updated estimate for the year, so it changed based on the estimate for the year. So you get some fluctuations in the quarterly tax rate for Bonheur UK, and this quarter it was particularly high. So I think on the tax side, in Bonheur UK, and also the new tax on the electricity levy, that's also calculated on an annual basis y ou have to look at these parameters on an annual basis than on a quarterly basis. W e can also walk you through that offline, but you are picking up a good point there. Yeah.
Okay. But in, you have accounted for, let's say, an estimate based on this future forward curve for Q4 when you have done that computation?
Yeah. On the DL, you have to estimate also the Q4, because we successfully lobbied that it should be done on a yearly basis and not on a quarterly basis b ecause on a quarterly basis, it would been really bad, and we would have paid quite a bit of very high taxes in the Q1 when the results were high.
W e hadn't had the offset when the prices were low in the second and the Q3. So if it's put on a quarterly basis, the tax rate would have been much higher s o it's on an annual basis, and then we have to update our accruals every quarter for what we think the tax rate will be for the rest of the year. So then we look at the forward prices for the Q4 and see what, how we should update the accrual then for the Q3.
Exactly. So just to finish the last question on that, is it so that the EBITDA is actually in the quarter isolated, it's inflated in the sense that you have made corrections for the first half of the year? So, I mean, you have a higher EBITDA, but a much higher tax, which basically distorts the, let's say, quarter picture.
No, it's the opposite. If John, you can flip to the result page. So it's the opposite, Sindre. Show you.
Okay. Okay.
You see, you see it on the high price levels, the NOK 26 million. It's booked as an OpEx. And we were actually in the forefront of taking as an OpEx, and it's now coming as a standard in the accounting that the high price level should be booked as an OpEx.
If you looked at this quarter isolated, we should not have any high price levels, but because of this annual kind of accrual thing, and we look at the forward prices in the Q4, we estimate that the year will be increased the high price levels with NOK 26 million. So actually, if you've taken that out, the EBITDA of Fred. Olsen Renewables would have been NOK 26 million higher. But it's the opposite.
Okay. Okay.
So it's,
Okay
... actually little lower than the underlying performance. Yeah.
Exactly. Thank you.
Your next question comes from the line of Jonas Fremming from SpareBank 1 Markets. Please go ahead. Your line is open.
Good morning. Thank you for taking my questions. I want to start off with a question around Codling. Could you give some more clarity around the plan there? Do you expect to sell down a large stake before the construction start? Could we see a sell down of such a farm ahead of FID? And, you know, do you have any guidance on CapEx also?
Yeah, I can, I can say... I can comment on your question. I'm not sure I can give you all the details because, of course, some of what you're asking too is very sensitive information together with our partner, EDF. What I said earlier is that we are now planning the project for FID. That means that the main activities in the project right now is the consent application. Basically, that's to be regarded as a final building permit for the offshore site. Second part is procurement of all packages, and the third is, of course, preparing the financing of the project. I think it's clear that we are looking at an option of project finance.
Then on top of that, obviously, we are continuously looking at all our projects from a portfolio perspective, thinking about when is it prudent to potentially farm down or get an investor in on the project. So that's not something we do just one time, or we do that continuously a nd of course, that's also relevant for Codling. But I think that's as close as I can get to an answer on your question.
All right. Thank you. But when you look at other farm downs in the offshore wind industry, would you say that it's difficult to farm down ahead of FID, or would that be, you know, possible?
No, I think the industry have proven there are several milestones which generate a significant value uplift for offshore wind projects, and which are relevant for any developer to consider if they are considering a farm down a nd that's probably the two most important is, of course, FID, as you are well aware, but route to market, the CFD, given that that gives a guaranteed revenue stream for a number of years, is also a relevant point as a milestone.
Then in addition to that, there is also consent or site exclusivity in some markets, which is relevant. I think you have several points during a development where you could consider a farm down. That will very much also depend on the market, of course.
Okay. Thank you. Next question from me relates to capital allocation. You have a quite good balance sheet at the moment with a significant amount of excess cash. Just how should we think about the capital allocation going forward? I mean, you could, you could potentially pay out significant amounts of dividends and do you have any comments on, you know, capital allocation and how you plan to deploy capital going forward?
I think we have answered this question many times before, and certainly we take the stand that we don't really comment on capital allocation in general before we have news to tell you about, specific news. But, Richard, do you want to-
No, I think, I think, but just to comment on excess cash, when we look at the three segments, or especially the high growth segments, renewable energy and wind service, there are so many opportunities, and we have such a strong ecosystem and so many possibilities to leverage that ecosystem into new positions.
T ypically, investments in those industries are quite capital intensive. Just a normal onshore wind farm. The last one we built, the Fävåliden, is a CapEx north of NOK 1 billion. A new installation vessel, we see where Cadeler and others are building around EUR 350 million.
T he word excess cash is, I think, a little bit... I don't really buy the word excess cash i t's more kind of, okay, with the ecosystem we have and the investments do we have, how can we leverage that to find the really good investment opportunities? And then if that's not possible, then you come more into the question of excess cash. But as we stand today, and where the industry is today, with all the opportunities you have, I would I don't like the the phrase excess cash.
So I think that was a much fuller answer. Thank you, Richard.
Yeah.
Good.
Okay. Thank you. Understood. And last question from me. You had some unrealized losses on the currency this quarter. Could you give some split on how much of the currency loss is owned by you? I mean, the figure you show is consolidated, so it will give more insight if you- Made it proportionate.
I don't take that off the top of my head, but there is significant cash in the joint venture, so the proportionate loss is lower. But I don't have that breakdown off the top of my head. Sorry about that.
Okay, thanks. Okay, that's all from me.
Your next question comes from the line of Daniel Haugland from ABG. Please go ahead. Your line is open.
Hi, Anette and Richard. So I was a bit late into the call, so if somebody else asked this already, I'm sorry about that b ut on the Blue Wind vessel, could you maybe give us just a little bit color on how will the economics for FOWIC work there? Commented a bit on lower EBITDA margins, but how does the economics work there? Thank you.
Alexandra is moving up here to give you a fuller answer.
Super.
Yes. I think, again, something we won't answer very specifically. I mentioned that we split up the backlog in four-way controlled vessels and the Blue Wind vessel because it's a very different structure. So the four-way controlled vessels, of course, we have the CapEx investment and hence, a much higher EBITDA margin, while the Blue Wind vessel is fully owned by Shimizu, and so contracted by us.
Of course, we're doing that for commercial reasons, so there's a margin there, but it is lower than, than what we have on the vessels that we own. I think sort of for market reasons, I'm not gonna comment specifically on, on the margins we have on the Blue Wind vessel.
Okay, thank you. But it's kind of right of us think you you're basically hiring it in, and then you're doing rates that are higher, and you do the margin, right? That's how it works in your P&L.
Contract set up is we have the contract with the end client and then have a subcontract with Shimizu t here's also a cooperation agreement that goes on the top of that, and there is a reason for the cooperation. Shimizu is a very large contracting company, but it's the first time they own a vessel. And that was the reason for the collaboration from their side, to get access to the market and operational knowledge in offshore, and of course, that also has the value.
Okay, thank you very much. I don't have any further questions, so I'll just hand it back to the operator.
Your next question comes from the line of Anders Rosenlund from SEB. Please go ahead. Your line is open.
Thank you. I have a follow-up to Sindre's question earlier when talking about the curtailment. In the report, it says that the curtailment was 60 MWh. But with a portfolio as large as yours, it, that's 45 minutes of production. W hy is this a big issue?
Hi, welcome back, Anders. I think the 45 minutes we have to look into your calculations there. I mean, it's... But let's take that offline. It's significantly more than 45 hours. Yeah. So we're pointing a little bit to the next quarter report, around the 10%, if you see without curtailment. Yeah.
Okay, maybe I misunderstood the sentence afterwards, but it's because it's 10% higher than last year b ut anyway... Okay, anyway, if we can discuss that afterwards, that would be great i also have a follow-up question on the Fuvik vessels j ust to be 100% clear, it means that you are basically recognizing revenues when you charter it out, or the chartered-in vessels, you recognize 100% of revenues when chartered out, and you get the charter-in cost as your costs.
I t's basically consolidated. But what happens? Do you have any commitments to actually secure employment, or is it just on a per contract basis that you do marketing, and then you are exposed through that period of time, where there is actually a contract?
I think I'll answer that quite briefly. No, we do not have any utilization risk on the Blue Wind vessel, and I think that answers your question.
Excellent. Thank you very much.
Your next question comes from the line of Jonas Fremming from SpareBank 1 Markets. Please go ahead. Your line is open.
Hi. So one more question from me. T his relates to Fred. Olsen Windcarrier also. I n 2026, you have a contract on Thor. So that's a good contract, and then you potentially have a crane upgrade. But when I look at the backlog, it definitely points towards another contract as well. And to my knowledge, you haven't disclosed any more contracts for 2026. C an you just add some light on this? Is there a second contract in 2026?
In terms of the backlog, we provide the data we provide. It's very commercially sensitive to say sort of the exact periods our vessels are available and not. B asically, the information we provide in this presentation is what we're willing to share with the market. And we do press releases when there are major contracts that impact the stock prices of Bonheur. Yep.
All right, thanks. Could you give an update on how many of the contracts that have taken FIDs?
We only have one project in our portfolio that do not have an FID. On that contract, we have very good cancellation mechanisms. I n the event the contract should not come to FID, that doesn't have a commercial impact on Fuvik.
Okay, thank you.
As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Your next question comes from the line of Helene Brøndbo from DNB. Please go ahead. Your line is open.
Yes, thank you s o I just have a few quick questions on the renewable energy side. I was just wondering about the maintenance cost that you have written was higher in the quarter. How much higher has this been than the regular level, and do you expect this to continue?
Ivar, would you like to answer?
Yeah, I can answer that, that quickly t he maintenance, the high maintenance cost, that is related to one-off incidents, really. We have some main components exchanges, and those we take as they come along. T hat goes up, and that goes down, and that was basically the reason for this increased cost, cost this quarter. And we have a couple of more main components exchanges going forward, but I would say this is within the normal operations of the wind farms.
Okay, thank you. And I was also just wondering about Sørlige Nordsjø II. Where do you see sort of the economics there with the maximum subsidy levels that have been provided by the government? Do you think this is good enough to bid on the project?
Yeah, I will try to answer that. I think first of all, we have not seen the final CFD contract yet. A s a consortium, we are still waiting to see what actually comes out of that. I think if you go back to our Q1 presentation, where we had a longer session around offshore wind in Norway, I think it was clear, at least as the framework stood at that point in time, that it was not sufficient.
Then there's been attempts to improve that, and I think there are still some attempts to improve it further. So where that exactly ends, I think it's a bit too early to say b ut it's clear that we have been reserved from the start, that it would be sufficient, and also been skeptical to the set up around one site in one auction in general. But the news came out last week, and I think I would like to wait a bit with answering your question until we've seen the impact of the news on the final CFD contract.
Okay, thank you.
If you would like to ask a question, please press star one on your telephone keypad. We have no further questions in our queue at this time.
Okay. Thank you very much for joining us this morning, and that ends our session here.