Bonheur ASA (BONHR) Earnings Call Transcript & Summary

Good morning, everybody, and a very welcome to the fourth quarter presentation for Bonheur. Richard Olav Aa, our CFO, will be part of the presentation. And then we will have, as we did last time, 3 of our CEOs for the different companies to present also their companies. So please, Richard, go ahead.

Thank you, Anette, and good morning from Oslo to everybody. And we can go to the first slide. It's a good result this quarter, and it's all across the renewable energy companies, and it's really related to 2 factors. It's the high energy prices and that the Wind Service segment has a good result despite 2 out of 3 installation vessels have been at yard in the quarter. So those are the really headlines driving the result this quarter but we'll go through them in more detail. So let's start with Renewable Energy, which had an EBITDA of NOK 1.060 billion, which is an improvement of more than NOK 800 million from fourth quarter last year. The result is characterized by high power prices, but also good wind production in the quarter, and my colleague, [Anders], will come back to that in more detail later. We're also proud to announce that the Högaliden project was completed in the quarter and adding almost 20% to the expected power production going forward within the budget. And also, a major event strategically in the quarter was the formation of Fred. Olsen Seawind, where we have gathered all the offshore wind activities under the leadership of large spender, which also will present later today. Some major events in the quarter. Also, of course, the JV with Vattenfall, which actually happened in January, but we highlighted this quarter as well where we are awarded a right to develop what we believe is a very attractive floating offshore wind project, just outside the coast of Aberdeen in Scotland over capacity up to close to 800 megawatts in the ScotWind lease out. Also, Codling is progressing as scheduled. Irish government are shooting for an energy auction later this year, and we see a strong push in Ireland for developing offshore wind. Then on wind service, an improvement from fourth quarter last year from NOK 102 million EBITDA to NOK 147 million this quarter. And again, this is despite 2 out of 3 vessels have been at the yard in the quarter. So it's a strong result across the board within this segment from all companies in the wind service. Bold Tern is going through its conversion program, getting a new crane for taking the next generation turbines in Singapore, and my colleague, Alexandra will cover that in more detail later. Also, Blue Tern had her class renewal in Denmark in the fourth quarter into also now the first quarter and also had a lengthening of the crane. That was completed, and she is now back in at work. Also, very important for week we were able to strengthen its backlog by close to EUR 80 million in the fourth quarter and now up to EUR 355 million in backlog over the next 3 years and the planning activities for a new build to continue to reinforce FOWIC's market position is in progress. The IPO, we unfortunately had to put on hold due to the geopolitical tension that we read about every day now, not at least the war in Ukraine. On the cruise side, we have a small improvement in the EBITDA from minus NOK 113 fourth quarter last -- fourth quarter 2020 to minus NOK 85 million fourth quarter last year. We have been cruising with 2 new ships in the quarter, but with low occupancy and also quite discounted prices in the U.K. market in the fourth quarter. The current plan for bringing the full fleet back into operation is to bring Balmoral into cruising in the second quarter and Braemer in the spring of 2023. We see good demand for cruises both in '22 and '23. But we also have to take a little bit of a disclaimer here that our first quarter sailings were impacted by Omicron [indiscernible] in quarantine. Then on the other investments, also a small improvement on the EBITDA, EBITDA of minus NOK 14 million compared to minus NOK 29 million, some [indiscernible] costs and drivers behind that. So don't put too much note into that. But also is very important on other investment that finally, the subscription revenue growth in the media business is turning positive with a healthy 4% organic growth in the quarter. And NHST is also investing in their SaaS business. Then on a consolidated basis, we see that operating revenues were up almost NOK 1.2 billion in the quarter, driven by the high energy prices and also the resuming of the crews. EBITDA improved by more than NOK 900 million as the revenues in revenue energy flows directly to the EBITDA. And the EBIT was positive by more than NOK 1 billion that we had some one-offs, which also went in a positive direction under financial items. Then on the parent company, the Board is proposing a dividend of NOK 4.30 per share, which is up from NOK 4 per share for the accounting year 2020, which represents a dividend payout of NOK 183 million. After that dividend, the equity in the parent stands strong at more than NOK 6.8 billion on an equity ratio of 66%. I come back to the cash in the parent and the capitalization of the group of companies. We also have to mention the post-quarter event that we're spending a lot of time on monitoring how it may impact our various businesses. And that, of course, the war in Ukraine. But what we say here and where we are, is it very difficult to assess us on. Now moving on to the consolidated summary already covered the revenues and EBITDA, somewhat lower depreciation this quarter. We have no impairments, and like I said, the net finance, we have several one-offs, both realized and unrealized items in net finance that comes out with a positive NOK 66 million compared to a negative NOK 115 million fourth quarter last year. So that is resulting in an earnings before tax of NOK 957 million. And then we have quite heavy taxes on the renewable energy in the U.K. So the net result is EUR 647 million. We will go a little bit deeper into the revenue side. We see an improvement in revenues of more than NOK 1.1 billion up to NOK 2.7 billion this quarter. The main driver is the renewable energy with an improvement of NOK 853 million. That is both that we have higher wind speed, good wind production this quarter but also significantly higher energy prices and [indiscernible] will cover the development on the process later in the presentation. Wind service, again, despite 2 out of 3 vessels at the yard, revenues were almost at the same level, NOK 844 million. And then we see the impact of cruising new vessels out at sea in the fourth quarter, generating NOK 310 million in revenue. And in other, it's the subscription growth in NHST that creates a small growth in the box. On the EBITDA, on the renewable energy, we see a direct pass-through of the improved revenues into improved EBITDA with an improvement of more than NOK 800 million in the quarter. And we also see wind service improving NOK 46 million despite revenues being down and 2 out of 3 vessels being at the yard. So the results of NOK 147 million in the fourth quarter '21 across the business units in service, including global wind service and FOWIC is a good result given the low activity. Then on Cruise, NOK 85 million negative, still have layup cost on the 2 vessels. We have increased marketing spending as we are going back to cruises and with low occupancy and fairly low prices in the quarter, we still have a loss in the Cruise business. But anyhow, the EBITDA at the fourth quarter at NOK 1.1 billion, an improvement by NOK 900 million from fourth quarter 2020. Final slide on the introduction on Bonheur before I leave the word to the CEOs. Group capitalization per fourth quarter. And this is an important slide, and how we capitalize the group. It depends on a solid green financing framework, which is now in place for Bonheur and all the renewable activities. So FOWIC already a green financing on their fleet and also -- we are using the bonds that we raised under the green financing framework to finance the expansion within Fred. Olsen Renewables. So it stands firm on the green financing framework. And we have a very clear policy for the capitalization of the group, which is highlighted in the 3 bullet points on top right. I will not go into detail, but just take them one by one, what they really mean and how that relates to the figures below. First of all, we have the strong current. That's the first point, but we will not expose the parent company in any way. The second is that, we diversified the funding sources for the subsidiaries. I'll come back to how we do that. And the third is that everything in the subsidiary is nonrecourse to the parent. So those are the 3 pillars of our financial policy going forward. And I'll also take them one by one into the numbers below and maybe start with one that is absolutely clear from the table below, and that is the 0.3 of nonrecourse. You see at the right hand column, we have 0 debt now that is guaranteed by Bonheur. On the second point, diversified funding sources, I would like to point you to the line some joint ventures and associated holding companies, where we now have NOK 878 million in cash and NOK 6.5 million in debt. That's where the bulk of the debt of the group of company sits, and that's where we have done the main diversification of the funding sources by taking in long-term infrastructure capital on our wind farms in Scotland and also have joint ventures with strategic partners like, for example, Keppel in Singapore on the Blue Tern. And then the third point is the strong parent position, which you can see to the bottom where we see Bonheur ASA sits now with NOK 2.3 billion in cash by the end of fourth quarter. On top of that, we have liquid bonds and shares and so on and external debt of 2.7%. And also you see the companies above the cruise lines wind service renewable energy, which Bonheur owns 100% are very low leverage. So by that, I hand over the word to my colleague, Anish, that will present Renewable Energy.

Just to introduce you, [Anders]. [Anders] is one of the 2 co-CEOs in Fred. Olsen Renewables.

Thank you, and good morning to all of you on the call from myself. If we go to the first slide on Renewable Energy, a brief recap of Fred. Olsen Renewables. We are an early mover in renewables. We had our first wind farm built back more than 25 years ago. Today, we have 12 wind farms in operation with the completion of Hogaliden. We have a track record of delivering construction activities on time and on budget. And we are growing our pipeline significantly. Now with the onshore development pipeline of 3.7 gigawatts in Europe and the development pipeline, we mean sites where we have long-term land agreements. We're also building competitive edge within floating solar. We have a 12 integrated in-house business model and doing all the steps from site identification, development, construction, operation and ownership optimization, and we clearly benefit from applying the learnings across the different phases. In terms of production, normalized year in the last 2 years, we had around 1.8 terawatt hours production. That was somewhat lower in 2021 due to clearly unusually low wind speeds in Scotland for Q3 and Q2. With the completion of Hogaliden, we have approximately 19% expected production to the 1.8 terawatt. So that will be a significant increase for FY '22. We go to the next slide. This is an important slide always, and particularly interesting for this quarter. Starting on the upper left corner, we see the capacity factors and generation. In this quarter, we had good wind conditions in Scandinavia, both Norway and Sweden and reasonably good in Scotland. So that provided a production of more than -- more than 600,000 megawatt hours for Q4. That is, as you can see, more than twice as high as it was for Q3. There is also more than 100,000 megawatt hours more than we had in Q4 last year. And that was important in the quarter with high power prices that you can see in the lower left corner. In U.K. and Southern Norway, on a quarterly basis over the last year, the power prices have been very correlated on a quarterly basis. But you can see the 2 axis there on the left and right-hand side that the power price in Scotland has been around £200 per megawatt hour and EUR 130 in Southern Norway. So both markets, very strong prices. Northern Sweden as you see also with solid prices, but significantly lower than what we've seen in Southern Norway. I'll come back to the reasons for that on the right-hand side. In the Continental Europe, Southern Norway and U.K., gas prices are the main driver for the power prices. And you can see during Q4 last year, you have the blue line that's the gas prices, they were very high during the quarter, peaking for December, Q4, then they have been somewhat lower for some months, but now they are for the reasons you know with invasion of Ukraine going up again. Carbon prices, the orange line, also high, saying around EUR 80. And for -- just to give the impact of this for Continental Europe, which will then impact both Southern Norway and U.K., we can multiply the gas price with a bit less than 2, and you can divide the carbon price by 3 to get to the marginal cost per megawatt hour in euros for power production from gas-fired power plants. So it's the blue line, the gas prices that has the strongest impact. Then hydrological balance in Scandinavia, the down-right graph somewhat improving, strengthening the hydrological balance started this year, but a very weak balance in Q4. It was driving high prices. The buildup is primarily in Northern Norway and in Sweden and with snow in South Norway. The reservoirs in Southern Norway is still constrained. Go to the next slide, please. Then to a construction update with Hogaliden. We completed this construction in Q4 within budget of around slightly less than SEK 1.2 billion. This is the second largest wind farm in the portfolio, and it's adding 19% to our portfolio. It's also the first wind farm in the world to be fully equipped with ZX Lidars' turbine mounted wind Lidars. These sliders use laser technology to measure the wind from approximately 300 meters before the wind reaches the turbine that allows for turbine optimization in terms of how utility blades and maximizing production. Then to the final slide from my side to update. We continue at full speed to do site electrification in U.K., Sweden and Norway. We're also looking at TV in the markets where we find that to be attractive. And we are entering floating solar. We have an approach to plotting solar, where we're building a strong competitive edge, and we're leveraging that to attract strong local partners. This particularly we're going then from markets with strong solar irradiation, good power prices and land for onshore PV. And we find many of those markets in Southeast Asia and also in Southern Europe, where we're able to compete. And we also have now established Fred. Olsen in Singapore, it's a regional office. On the development side, we have 2 new sites in Southern Sweden, adding 180 megawatts to the portfolio. We now have a significant development portfolio. That's a long process where you need to do the right things, all the way from wind measurement design and then you come to all the local consultations, the environmental impact assessment and the permitting. So that's a place where we put a significant effort into. The same we do for the consented sites where we now have 3 sites in Scotland consented over the last 15 months but we are working hard to progress towards. And then the other update is that we have now Hogaliden operation progressing from construction to operations. . So that concludes my presentation.

Thank you, [Anders]. Next one now is Lars Bender responsible for our offshore wind development. And we are very happy to announce the name of the company now that you are the CEO of Fred. Olsen Seawind. So please, Lars.

Thank you, Anette. As Anette already mentioned, we have in this quarter established formerly Fred. Olsen Seawind, which will be the company structure for our offshore wind activities going forward. I will end this presentation, give you a short update on the main project activities, but also say a bit about the path going forward for our company. So first slide. The first I'll do is a short update on the Codling wind project in Ireland. And just to recap the Codling Wind project is the largest project in Ireland. It is the largest infrastructure investment in Ireland, a project of up to 1,500 megawatts, so a large offshore wind project. We are developing the project together with EDF in a 50-50 partnership, and the project is 1 out of 6 classified as a Phase 1 project. This basically means that we will have priority into the first auction, which as Richard mentioned before, is roughly a year from now. We still see a very attractive project in Codling. We are, by far, the largest project in Phase 1. We have around 32% of the capacity into that auction. We have a project which is close to shore, favorable seabed conditions. So overall, we see a very good competitive situation for our project with economies of scale and favorable conditions on site driving that competitive situation. If we then look a bit further into what's happened in this quarter in Ireland, there are mainly 3 points to be aware of. First of all, our project is on track. We are running engineering, procurement and consenting processes in the project. We have around 40 to 50 employees working with that, together with EDF. So we are happy that we are on track and preparing for the auction later this year. The second point is that the government is also very much on track. They have picked up speed on all regulatory framework. It's from grid to the terms and conditions for the auction but also the rules around consenting is now slowly coming into place, which is very, very positive. In addition to that, the third point to take away from Ireland is that the government has also announced that there will be a Phase II and also a Phase III or an enduring regime as they refer to it as, which means that Ireland now is a long-term market for offshore wind, which, for us, of course, is important given the position we have now in Ireland, and we naturally see it as a natural point in our country to develop further as well. And then to a bit of good news. As Richard mentioned before, we were one of the companies that were successful in the Scotwind competition in Scotland. We talked about it on the last quarter that the results would be announced in January, and they were. And we, together with Vattenfall secured the site in that competition. It has undoubtedly been the most competitive competition seen in offshore wind. The government received 74 bids. So very much unparalleled competition. We've seen and also a lot of new constellations in offshore wind going into that competition. A total of 17 projects was awarded with around 10 being floating projects. If we look a bit closer to our project, it is a project of 798 MW. It's a floating project. It is situated in the attractive E-Zone. So we have a project with a -- in our opinion, good location, close to demand, close to grid, relatively favorable wind speeds and also with a good water depth and solid conditions for the wind. So overall, we see a project with a good LCOE profile, and also a competitive project when we look at the coming CFD rounds in Scotland. Naturally, this is -- we've been very happy with the securing site. It's been a team across -- for those that has worked very intensely with this over the last one-and-a-half years. So winning there solidifies our position, but that really also gives us something to build our future on as well. So very positive. We will be looking at developing the project together with Vattenfall in an integrated team. So both companies will supply resources into that team with base out of Scotland. And the project will be developed over the next year. Currently, we are targeting CFD in round 26 and FID around 2027 to 2028. If we then look at this last slide and trying to put together, we are, of course, very happy that we now have come across the 2 gigawatt mark for secured projects. So we have Codling, [indiscernible] Ireland, a very mature development project. And now we've further added almost 800 megawatts to that portfolio of floating project. So overall, a solid portfolio of projects which gives us a good basis for growing our business further. And that will happen through several tracks. First of all, we want to develop in our core markets, and that would be Norway, Scotland and Ireland. We want to solidify our position in those markets. We have already great positions, but we naturally want to build further on that. Then we also want to look at the synergies we have with our related companies. We want to look at new markets, to take the track record we already have and the experience we have to develop into those new markets. There's a clear path to a larger portfolio for us now, built around a very solid platform of Codling wind farm and the Mara Mhòr wind park as well. So overall, in recapping this quarter, it's been a very good quarter for the offshore wind. First of all, we've separated our business into a separate corporate structure, which gives us a platform to grow on. We secured Scotwind lease. And third, we are on track with the Codling project for an auction later this year. And with that, I will give back to you.

Next one now is Alexandra Koefoed, CEO of Fred. Olsen Windcarrier. So last one out, it's supposed to be ladies first but maybe next time, Alexandra. So go ahead, yes. .

Good morning, everybody. I will give an update on Fred. Olsen Windcarrier for the last quarter. So firstly, just very brief introduction to Fred. Olsen Windcarrier. We are a leading wind turbine installation contractor. We had 20% market share since our vessels were delivered. So we have a very solid foundation for a growing market. In the last quarter, as Richard already mentioned, we have had 2 vessels in yard. I'll go in sort of a little bit more detail on the next slide. Brave Tern, she has been working more or less for the whole quarter. She's been on the Yunlin project. That contract was terminated by the client in December, but that meant we were still paid the full fixed fee for the project. Bold Tern, she is in Singapore doing sort of the full upgrade to become a future-proof vessel for the next-generation turbines, and Blue Tern has also been in yard in Q4. That's been linked to 10-year class renewal and some project updates we've done [ Technical Difficulty]. We've done some modification to the [indiscernible] and the vacuum system to make her ready for projects up until 2024, which sort of brings me to the next point where we have secured additional work. So Blue Tern, she finished the Yard's Day as planned mid-February, and she is now on a new contract that we secured in December. All in all, we secured NOK 18 million of new contracts in December, which means the fleet is sold to 80%, 90% for the next 2 years, which we are very happy with. And overall, we have a NOK 355 million backlog. In terms of results of the quarter, that was carried by Brave Tern completely as the 2 other vessels where we are, but still a solid EBITDA of the quarter. And looking at the full year of 2021, we have an EBITDA in wind carrier of almost NOK 53 million, which is our best year so far. The contracts that was awarded, there were 3 new contracts. They were linked both to work in Taiwan and Europe. They were linked to existing and new contracts. At the time when they were signed, 2 of them were reservation agreements. One of those is now firm, and we do expect the second one to be firm in the near future. Further, in terms of preparing ourselves, we have secured an extension of our existing facility with DNB and SpareBank1 with NOK 35 million. This is on the same terms as the loan was secured in summer of 2020, which means this is still classified as a green loan and on the same terms. So this gives us flexibility in the company because we have some investments that need to go in. But that also fully finances the upgrade program for the fleet. So firstly, we are continuing to pursue our long-term strategy to reinforce our position in a growing market. We see very significant growth in this sort of range of 20% annual for the next decade, and we are working to be a leading global turbine installation contractor in this market. And with that, we need the teams and assets to deliver the services in that market. So firstly, we have an upgrade program on the fleet, which we have initiated some time ago, so to take it vessel by vessel. Bold Tern is the first vessel. She is currently at Keppel Fels in Singapore. And what you see here is pictures of the crane pedestal that's installed at Keppel Fels. The crane is in China waiting to be transported to Singapore. We have seen some delays that, but that's due to the very, very strict requirements for vessels entering into China in terms of COVID but we are now looking to have a solution. So I think we can very soon share the good news that the cranes is on its way to Singapore, and we do expect to depart the yard in early Q2, and then the vessel will head straight for project commitments. Brave Tern, we have in the fourth quarter placed a firm order for her in Ukraine. That's Huisman 1,600 tonne crane, exactly the same crane we are installing on Bold Tern these days, and we are expecting to complete the new crane installation on Brave Tern in early sort of 2024, and the reason for the timing is because she actually has project commitments up until then. And then finally, Blue Tern, she is planned for an upgrade in first half of 2025. We're still optimizing the crane size on that vessel. But she also has contract commitments up until the end of 2024. So all in all, good contract coverage for our vessels. And then finally, we do continue the work on build to create a diversified fleet to serve diversified projects across the globe. We do have a clear ambition to be present in all what we see as the 3 main markets in the next decade, which is Europe, APAC and the U.S. That was all for me.

Thank you, and then back to Richard covering some of our additional companies.

Yes. Thank you, Anette. I'm going from one global market leader to another global market leader. We have global wind service, which is clearly the market leader in offshore wind service installation services and very often work in tandem with Alexandra's team. Also a good year for Global Wind Service, and they were now up at almost 1,400 employees per fourth quarter last year. And with the growth ahead of us, they are now really ramping up also for expanding that further into '22 and '23, and we're very happy that we have created own training center, so we can train our own employees when we see the shortages of people in the industry now. But back to the market. We are in global in service now, truly a global player. And we're working also very in tandem with FOWIC now especially in the Far East in Taiwan. Like Alexandra said, 2 out of 3 vessels of FOWIC are now in Far East and GBS is also mobilizing heavily for taking on more projects in the regions. But also a significant presence now in the U.S., we have executed the larger onshore projects in the U.S. the last couple of years and getting more and more traction in the U.S. market, which is a very important foothold for GBS on onshore presently, but also then positioned when offshore finally takes off in the U.S. like it seems to do now. So I think I'll leave it by that for Global Wind Service. And going over to Cruise. Yes, see a nice picture here, one of the new vessels. And it's actually a very good picture where it's a picture of one of the new vessels that were actually able to go to Iceland already in August and one of the first vessels out on international voyage. And our customers, they are really eager to cruise us. So we have had good bookings all through the Omicron outbreak. But obviously, only with 2 vessels in operations and all the things you have to take care of with quarantine and logistics and everything, the operation in the quarter was only 66% on the 2 ships. And in the first quarter, we had Omicron effect where a lot of the crew had Omicron virus, and we had to then put -- due to safety reasons -- we had to put the ships idle for some cruises, but they are now back into operation again. So hopefully, the COVID situation in cruise line is behind us. Bookings are good, and restrictions are easing around the world. And based on that, we have no plans for sailing Balmoral from the second quarter as we see strong demand for her tenders. Well, on Braemer, given the whole situation with COVID and Omicron, we decided to push her back to -- sailing date back to the spring of 2023. We know that fourth quarter, first quarter is typically a low season. So we thought it would make more financial sense to take her back into the waters next spring. But of course, with the world situation now with the war in Ukraine and everything that may follow from that, it's obviously a very uncertain time also for the cruise business going forward. But then maybe end where we started and not going through the results again, but say that in addition to good results in the quarter, I just want to reiterate that we have had some good strategic advances in the quarter and maybe particular with the creation of Fred. Olsen Seawind and ScotWind onboard, but also the strong progress, I would say, on the strategic direction of FOWIC with upgrades of the vessels and adding to the backlog. So all in all, a has been a strong quarter financially and also strong developments on the strategic side. So Anette, back to you, should we open for the questions.

Yes, absolutely. Please go ahead. .

[Operator Instructions] Our first question comes from [Tanner with Clarksons].

Congratulations on a strong quarter. Richard or perhaps Anders, I was wondering if you all could talk a little bit about the power price environment that you see now. A lot has changed in the world in the last week, and I think politicians have been pretty clear that moving away from Russian gas is a top priority in Europe, and that seems to set up an environment where power prices may stay higher for longer. But I just wondered if you all could kind of share your thoughts as what you see going forward.

Million dollar question.

That's a million dollar question. It's very market specific for our operations, I think. In Southern Europe, we will clearly be impacted from the prices in Continental Europe. And gas prices are now also forward gas prices, they are around 115. So it's the same forward for the next few months than they are today. How that will develop, how Putin is behaving, I don't want to speculate on that, but is obviously the gas prices that are the biggest uncertainty, and how that will impact the power prices, both in Southern Norway and in Scotland. And as you are aware, we have most of our operation production in Scotland. In Northern Sweden, there is a strong hydrological balance and a lot of onshore wind, so that will be less impacted by the gas prices. So it's the gas prices, which we see as the big uncertainty. They are -- before prices are today as they are foreign prices are similar to the current spot prices is what we have seen over the last few days. And they will develop. I don't know if you want to speculate any more.

No. But, you have a very good point about the long term for the need for more renewable energy. That's very clear.

Yes, I understand. Obviously, it's a dynamic situation, but I think that is, like you said, the million-dollar question or billion kroner question this quarter. In terms of just renewable energy for the fourth quarter, I think one thing that positively surprised was the level of generation, one of the reasons people talked about for higher power prices in Q4 was relatively low wind speeds, but the load factor was quite good. First quarter seems to improve, at least kind of what you hear in the media. I mean how does the first quarter look compared the fourth quarter for the renewable energy business.

Thank you for the question. I think we will comment on the first quarter when we get to the first quarter results.

Okay, all right. One last one for me is just Seawind, like the name. It's obviously very well positioned with the project [indiscernible], in Ireland and the wind and Scotland. But I mean, these are also projects that require billions of euros to execute. I understand you may not have an exact answer now on how you intend to finance them, but what are kind of the range of options that you're considering? And kind of how do you see a time line for the future of Fred. Olsen and Seawind developing?

Well, we're considering all options at the moment and really looking at the time line, obviously, the big money starts being spent when construction starts for the wind farms. So I think for now, it's a project. It's a project steering the projects in a good way. And so time-wise, we have a decent time in front of us to also deal with the financing. If you want to add something?

No, I can just add back to our financial policy with the 3 pillars I mentioned earlier in the call. The second pillar is that we develop diversified funding sources for the various subsidiaries, and like we've done in onshore wind, for example where we have taken in long-term infrastructure capital on our Scottish wind farms, and there could be range of other options and renewable energy is an attractive class to finance. So we just have to, like Anette would say, work on all options.

But we were very glad you'd like the name.

It's simple and to the point. It's very good.

[Operator Instructions] Our next question comes from John Olaisen with ABG.

Yes, a couple of questions, if I may. If I start with Fred. Olsen Windcarrier. Of course, you had to put the IPO on hold. But I just wonder, how important is it for you to have control of that company. The plan was to have a roughly 60% ownership, if I remember correctly, of Fred. Olsen Windcarrier after the proposed IPO. Is this -- have you considered consolidating or merging with somebody else? I guess -- as you mentioned, you said you wanted to be a market leader, and there are a lot of players, but most of them are very, very small. Could you shed some light on your thoughts on the need for consolidation and the opportunities for you potentially? And how do you view that, please?

Yes. I think to comment on what we do when it comes to future possibilities with other companies, we're not going to do that, you know that. But you asked about how important Fred. Olsen Windcarrier is for us. I think we see Fred. Olsen Windcarrier as a very important company with the cluster of companies we have within Fred. Olsen, renewables companies. It certainly is in the center of the development, and we have, over the years, developed the services of the company. We believe in the quality the company delivers, and also feel that there is a very good possibility for making sure that we also work together with the other companies that we have in Fred. Olsen Renewable to further add new offerings to our customers. So generally on consolidation, I think the industry has been talking about this for as long as we have been in this part of the industry. And we keep developing the business as we see right for the business, but have no further thoughts on consolidation.

And then maybe a question to Richard. Now with the high electricity prices and the great results for that part of your business, of course, there's a minority interest position or the noncontrolling interest is becoming a big number. I just wonder if you could outline a little bit to us how that impacts the balance sheet. For instance, you have a gross cash position of NOK 4 billion. I just wonder if it's possible to discuss a little bit how much of those NOK 4 billion in cash belongs to your partner, so to speak? And how will that be distributed out. If you could just tell us a little bit about the big impact on the balance sheet from the minority interest, please?

Yes, sure. Maybe if I could get a little bit of help from my colleague [Jeroen] to flip back to the group capitalization slides, I can show you there, John. Yes, this one what you see here on the 2 lines that relates to the renewable energy at the top and then also the fourth line from the top. On the top, you have the joint ventures where we have brought in external capital, both debt and equity, where we have the 8 Scottish wind farms, 8 of the Scottish wind farms, where we have 49% owners from TRIG, listed The Renewable Infrastructure Group and Aviva, a large U.K. insurance company. So what you see here, John, is that those entities sits with a cash position per year-end of NOK 519 million and external bank debt with the long tenor debt with Japanese and German banks. So that's where that cash and that cash is then distributed out on a regular basis to the owners. And then you have renewable energy [indiscernible] and that's where we have the one Scottish wind farm we own 100%, and the 3 Scandinavian wind farms that we own 100%, which have no debt, and sits with NOK 168 million in cash. We also had some repatriation of cash from renewable energy into Bonheur in the quarter, but we have also had outflows from Bonheur into cruise lines and others that needed financial support from the parent. So that's, I think, as far as I can explain it with these numbers, John.

No, that's good reminder. My final question is regarding the Fred. Olsen Seawind. Maybe start in Scotland. I just wonder why -- and it's probably a rational explanation, and I know the lead times are long. But could you tell us -- why is it -- why do you expect to see CFDs auction to take place in '26? What does it take 4, 5 years between now and the CFD auction, why such a long time?

Yes, I think Lars, you can answer better.

Yes, I think actually, [Anders] answered it a bit earlier for onshore wind. There's a lot of work going into a project before you can actually go into an auction. So the focus over the coming years will be to obtain a consent. In order to obtain a consent amongst other things, you need 2 years of bird surveys at site, you need to do geotech work at site. So there's a lot of work before you can secure consent and you need that consent before you can actually bid into an auction. In addition to that, grid needs to be secure. It needs to be developed. So there's a lot of development work before actually bid into an auction. I think our time line is fairly aggressive actually. We do see that we have a project which can be developed quite quickly. So we are actually on a quite fast track time line, even though, as you alluded to, it might not seem like that, but that's basically because there's a lot of work to be done before you can bid into an auction.

And then even after the CFD auction takes another 2 years before you have the time for investment decision. All in all, we're talking about 7 years. So it just sounds very like a long time if you now with reference to the earlier question with European politicians trying to speed up any renewable production. It's difficult for them to do that with these kind of lead times, I guess. But that's the way is, I guess. Or is it possible to speed up if they decided to?

Obviously, you can always speed up. You can, of course, look at the regulatory constraints. But as the regulations are in most countries now for -- I think both for offshore and onshore wind, there is a lead time. And of course, there are good reasons for that lead time because you want to secure that the projects you develop. It takes consideration of environment and other factors before you actually start building. So there are good reasons for that. But yes, you're right, there is a lead time to developing renewable energy, whether it's offshore or onshore.

And my final question in relation to this is Codling. The now say you expect the CFD auction in '22, '23. Is it possible -- is there any chance it could happen in '22? Or do you think it's slipping into '23? What are the next milestones or indications that we'll get? When should we expect an announcement? When it will happen?

I think the last announcement the government has made is that they expected around November of this year for the response, CFD auction. So that's currently also our expectation. Naturally a time line of that can slide with a few months. But as I mentioned before, what we see is that the curations the government is now doing on the terms and conditions for the auction, but also relation to consent is on track. And therefore, we believe it's a realistic time frame that the government has set up with an auction late this year.

And when will it be -- if it actually happens in November '22, when will -- I guess, the government will in advance, say that it will happen in November '22. Is it like 6 months before? Or is it closer to -- close to November?

Yes, the government is currently working with a time line where they will do a prequalification sometime after summer. So probably, we will have more clarity on the specific time line after summer, at least.

At this time, we have no further questions. I will now hand back to the speakers for their final remarks.

Thank you very much. I hope you have gotten the information you need. So thank you for today.