Bonheur Asa

Good morning and welcome to the third quarter presentation for Bonheur. My name is Annette Olsen and I am the CEO. As usual, our CFO, Rikard Olav Å, from Fred Olsen and Company, will present. And in addition, we have the CEOs for the subsidiaries that each will have their presentation. At the end, we will open for a question and answer session. So go ahead, Rikard.

Thank you, Anette. And also a hearty welcome from me to this third quarter presentation. Before we go into the numbers, the quarter has been an okay quarter with improvements across all business lines and also all the major companies are making healthy EBITDA profit. That being said, we also have a quarter where the asset utilization is not at 100%. We had one big wind farm out due to fire by one of our suppliers. We have one vessel in yard in wind carrier and utilization in cruise lines is still only at 78%. So there is still a lot of potential. But with that, we can go into the numbers. We have operating revenues at 3.6 billion, which is up 400 million compared to the same quarter last year. EBITDA improvement of 138 million, up from 800 to 938. And EBITDA improvement of a little more than 100 million, from approximately 500 million to approximately 600 million. A doubling of net result after tax from 172 to 350. And I'll come back to the tax effects this quarter. Parent company remains, according to policy, very strong with an equity ratio of close to 76% and cash in parent at 2 billion at the end of third quarter. The highlights in the quarter, and here the CEOs will come back to these bullet points, so I will only make a swift comment about them now. But starting from left to right with renewables, improvement on EBITDA with 20 million to 263 million, despite 25% lower power prices. This is a result of higher generation, despite, like I said in the beginning, one of the largest wind farms, Midhill, have been out of the production for the full quarter. Sofia Jebsen Olsen will come back to the details on that. Very proudly, we won two power contracts in the CFD allocation round six, which will then enable the building of Crystal Raid 4, which we already had an FID on, and potentially also Windy Standard 3, which will be covered later in the presentation. Also, a very important milestone this quarter, the consent application for the Coldling Wind project, a document of more than 11,000 pages, a massive piece of work, which is for the planning permit for the project to hopefully go ahead in the not-too-distant future. Windcarrier is really driving the improvement in this segment from 399 to 435, but also good results in global wind service and UWL this quarter. Åke Magne-Ore will come back to development in the backlog and a potential new contract. But also, like I said in the start of the presentation, a strong result, but one of the vessels at the full yard stays. So the utilization of the turn vessels is only 63% in the quarter. Cruise, also an improvement in EBITDA from 213 million to 255 million. It's improvements across the board. It's a slight improvement in occupancy. It's a slight improvement in ticket income. And it's a slight improvement in costs. So a marginal improvement across the board. But still, 77% occupancy in the peak season is a too low number for cruise lines. And on that note, it's very good to see that the cruise lines organizations is able to increase booking. So their booking numbers now at end of Q3 is 15% higher than compared to Q3 last year. In the other segment, an EBITDA of minus 15 compared to minus 56. The main driver for this improvement is a much better result in the media company, NHST, which had an EBITDA of 57 million this quarter compared to 4 million same quarter last year. A lot of cost cutting is the main driver behind this improvement in results, but also some improvement in the advertising markets. On the financial side, we redeemed a bond loan of 800 million in third quarter and we issued a new bond loan in October of 950 million. And we're very happy that we were able to do the new bond loan at the lowest margin we ever have achieved. So it's a strong demand for Bonaire bonds currently in the bond market. Then we have Fred Olsen 1848, which will be covered by Per later in the presentation, and also Fred Olsen Investments that are progressing with their investment activity. This slide is a new slide in this quarter, and you may have seen that we have modernized the slide and made them which we think are better, and this is a completely new slide. I think it's a lot of good messages in this slide. And if we start to the left with the revenue development, and here we go back to fourth quarter 2017 and up to third quarter this year. Why have we chosen this time period? Well, we want to see a time period pre-COVID and the time period post-COVID because that had a significant impact on our business. especially on the cruise business, but also on the renewable energy. If we look at pre-COVID, we had revenue on approximately level between 6 and 8 billion and quite evenly distributed across the business lines. Then COVID came and cruise lines went to zero revenue. Also, energy prices fell and we also had low utilization in the wind service segment. So revenues dropped actually below six billion during COVID. Then coming out of COVID and of course, raising energy prices. The renewable energy segment really drove up revenues. And we now also see that cruise lines is coming back. Wind service is generating strong revenues across the board in Fovik, in global wind service, and also in UWL. So we see now a completely new revenue level compared to pre-COVID. So we're now up between 10 and 12 billion in revenues on a 12-month rolling basis. All right, but revenues, you don't make profit only from revenues. You have to manage your cost and investments and so on. So when you take a look at how this has transferred into operating results on the right-hand side, we can also see the trends from the left are even more reinforced in the EBITDA. So pre-COVID, we see an EBITDA of around an average of around 1.5 to 1.6 billion. where renewable energy is really carrying the big part of that EBITDA. Small contribution from cruise and a small contribution from the wind service sector. Then during COVID, obviously, cruise lines, large losses, falling energy prices, and also not the best utilization in wind carrier. So then down to an EBITDA level, slightly more than 500 million on a rolling basis. Then coming out of COVID with strong energy prices, we see renewable energy really shooting off, while the contribution from the wind service is small and cruise is still negative. Then we see renewable energy going down on the drop in energy prices, but then cruise line is coming back with the modernized fleet. And also wind carrier coming into the market with much better rates, much better utilization and much better results. So we are now at an EBITDA level on a four-month rolling basis from the peak of the renewable energy prices. And the last couple of years, we are now between three and a half and four billion in EBITDA. And all three business segments are contributing significantly to the CBTA. So when we take on this more historical perspective, it's a quite interesting perspective. And we also felt it was important to convey this picture to you this morning. Then going back to the quarter, again, we see strong revenues in the quarter, despite two significant assets being out of operation. Revenue increase is mainly in the wind service segment. While we see the EBITDA increase is spread across all three segments. And again, all companies are making good profit in the third quarter. Net finance on depreciation, slightly higher. Net finance needs a comment. 3Q23, we had significant unrealized losses on financial instruments, mainly related to the interest rate swaps in renewables. Well, when interest rates are dropping, we have to take down the gain we have on those swaps. It's still a large gain in the balance sheet, but when interest rates are coming down, it will be a loss. So that was really impacting the 213 million last year. We still have some of the same effects this year, but we also have positive currency effects. So the net finance is a loss of 165. Normally, without these unrealized gains and losses, net finance should be at the level slightly below 100 million per quarter, given the debt level across the group. So that takes us to an earnings before tax of 438, which is an improvement of 154 compared to last year. Then tax cost is actually coming down despite a stronger earnings before tax. And the main reason for that is that we now have good profits from vessels in the tollage tax systems. All three cruise vessels, Braveturn and Volturn, are in the tonnage tax systems while more of the result in 23 came from the wind farms in scotland where we pay tax so that makes the net result to 350 which an improvement of 178 million and more than a doubling on the on the net results so to the financial position of the group um in addition to um improvement in the results. We see a strong deleveraging across the board in the group over the last couple of years and also particularly strong this year. So I will not go through the financial policy now. We have refreshed it and made it more, what should I say, easily accessible to the left. But we will not go into that now. That will save for later. But there's nothing new there. But just looking at the numbers and the deleveraging, we have... Been true now, we look at the 100% owned entities. We have a cash position of 4.8 billion at the end of the quarter and external debt of 2.6 billion. So we have net cash of 2.2 billion. If I go back to the earlier slide I showed you when we came out of COVID, that was a complete different picture than the 100% owned entity had more debt than cash. And what has really changed, you can find in the wind service segment, which now sits with 1.7 billion in cash and external debt of close to 400 million. So a net cash position of 1.3 billion, while that was in a net debt position all up to last year. Same with Cruise, generating good cash now and has a cash position of 738 million by the end of the quarter. And the external debt is only the remaining payment on the seller credit to Holland America Line. So a net cash position of 633. Bonneur, the mother company, has always been fairly balanced between cash and debt, and we still are. So we paid down the bond loan. So that took down the debt and it also took down the cash. But that will reverse itself now in the fourth quarter with a new bond of 950. So that will increase both cash and external debt for Bonneur Assa in the fourth quarter. On the less than owned 100% entity is not any big change on the renewable energy. Those are the long-term loans related to the UK wind farms. So they are just amortizing as planned and the wind farms are generating cash. While we see a big change on the wind service, also there with strong deleveraging, both in UWL, but also in particularly for Blue Wind, which have been generating good cash the last periods. So all in all, a very strong situation on the 100% old entities and as planned on where we have the joint venture and where we have the significant debt in the group of companies. Finally, and also what's very important for us and also particularly us that work with the financial reporting, we are from next year, or actually for 2021, This reporting year to be reported next year by law need to be compliant with the new ESRS reporting standard. So I just give you a short update where we are on that. I think we are in good shape. So what we are working on right now is this double materiality assessment, which is really the building block for everything in this reporting system. So that is how we impact the external world and how the external world may impact us. So we're doing this for all the subsidiaries and Bonheur ASA. And it's building on the same we did last year. So that is work in progress now this autumn. Then as the one that have read our ESG report carefully, you see that we have a disclaimer on the scope three reporting for CO2 because that has been very difficult. And I don't think there are many companies that have this fully in place, but we need to get it in place. So we have acquired a software that can help us do this scope three reporting much more efficient and get this in a much better place than it has been. Then to comply with the ESRS, we also need some new policies into the ESD statement next year. We need to refresh our environmental policy, our social policy and our governance policy and tailor them to the reporting requirements. But I was also very much like to emphasize on this slide that what we do at the model company level is one thing. That is a lot to do with reporting. But what is really matters is what happened in real life in the subsidiaries. So we have taken a position that the subsidiary reporting is actually the most important in real life and what the subsidiaries actually do. So to have a strategy process integrated with the strategy in the subsidiaries on sustainability is really important. And we also are transparent on this and publicize the sustainability report for all the major subsidiaries publicly. So that's where you really should focus when you look at what is really changing the needle on sustainability and makes us drive this forward, because that's where we're close to where the action is. So by those words, I hand back to you, Anette.

Thank you. The first company that we'll present this morning is Fred Olsen Renewables. And Sofia Olsen-Jepsen, the CEO, will do so.