DOF Group ASA (DOFG) Earnings Call Transcript & Summary

Good morning, and welcome to the Quarter 4 Presentation for the DOF Group. It's -- we start with a few slides telling about the company in more general terms, and then we go through the highlights for the quarter. So this is DOF Group. And so we are now 4,100 employees, which is a small growth of 100 people in the last quarter, and I guess that's reflecting the market that is -- that we will be growing going forward as well. So 4 main operational hubs: North America, APAC, South America and Atlantic. South America is mainly Brazil, where, of course, we have the biggest exposure. And then we see the nice graphs here. So revenue for '23 was NOK 13.4 billion. So a big growth from '22 and the EBITDA at NOK 4.9 billion, which is more than NOK 1 billion up from '22. So that's at a glance. On this slide, it's an old one, but we have refreshed it a bit. So the new here is the graphs on the bottom and under. So this slide is showing what at DOF, we are vessel owner but we are also a global service provider for the subsea and renewable industry. And what we deliver is integrated projects around the globe. So we like to call it a one-stop shop for offshore project development and execution. And why do we do it? And I think the graph here show why we are doing it. So the blue graph at the left-hand side shows what we view as EBITDA from our vessels. It's around NOK 4 billion. And then what we get out to the projects of the organization, which is a big growth from '22. So we are at NOK 940 million, and then the total of NOK 4,872 million for the combined. What's interesting is, of course, that we have another vessel value and over growth of NOK 28 billion. And then what value do you put on the organization, yes. So I guess we at least would argue that, that perhaps you use a decent multiple on the organization and that you are mid-30 at least on net asset value for the company. We come back to that a bit because we have done some -- we have a few slides on the recent awards and showing actually the multiple we are getting now and the more that we are getting now in the market on. And I guess that, in our opinion, of course, shows that -- tells us that the market value asset will continue to rise because the deals we are doing now, of course, has a very short payback on the present values. So the next one is highlights for quarter 4. So high activity in all regions. What I think made me most happy was that finally, APAC got full speed. And into '24 as well where we see, I guess I could almost say I'm expecting 100% utilization on our APAC fleet in first half '24 at much higher rates than we had last year. But let's say, I hope for 97%. So it's looking good. And of course, we have been waiting for that for a while. So average utilization globally at 91%, a bit better than last year. And not a very impressing order intake in the quarter. So at USD 147 million. But we have a few slides on order intake later on. And what we expect, of course, is that first half '24 will really lift the order intake to new heights based on the tenders we are working on at the moment and where we are in the processes. So it's -- so we expect -- and of course, we have a slide showing that this is going up and down. So it's not the same order intake in every quarter, yes. And I guess, sold a few boats. We sold non-core PSVs. We bought them from banks and sold them again for a small profit. And then we hired in a big 400-ton crane boat, Maersk Installer. And of course, that is a reflection that we think the market is good and also that we charter out our own Skandi Acergy to -- at a very high rate. So talk a bit about more about that later on. But we see, we are gradually increasing the chartered in fleet. So we are now up to 5 vessels on chartered in. And it might be that, that will gradually increase going forward. And then Hilde will talk more about that. So NIBD against EBITDA of ratio of 2.8. Yes, so it's moving very fast in a downward trend. So of course, we expect that to continue through '24. And of course, the interesting is, of course, a few years back, people talked about the refinancing risk, but I don't think there is any refinance risk anymore. And 2.8 is the average for the whole group. The silos debt to be refinanced as the boat has a much lower number than this year because the -- so we don't see any risk at all of that. But Hilde will talk more about that. And the graph here shows the annual NOK 13.4 billion in turnover and NOK 4,949 million in EBITDA and operation, it's NOK 4,872 million. So I guess we are delivering above the guidance, which we then have updated 3 times through the year. So we are happy with it and -- so we can conclude that the '23 has been decent year for us. And then remember that if we hadn't had the accident on the Buzios, it will be much better. So that was history. So I guess now we will talk a bit more about it going forward . And we make a lot of effort in this space. And of course, the sustainability for this default process a lot from fuel consumption to HSE and so on. And I guess this is just a snapshot. Perhaps the most important here for the commercial side is the PEOTRAM ranking in Brazil. And we've always been #1, but this year, we became #2, but at the highest ranking we ever had. So -- and of course, this means that we on tenders can get 3% higher rate on the boat, yes. So you can be 3% more expensive than your competitor, and still get the job done. And if you don't bid pipelay at $200,000 to $300,000 a day, 3% is a decent margin. So we see that it's important. And perhaps what makes me most happy, of course, is the LTI frequency. So we have been -- have a very good development through the year on safety and incidents. But every time we talk about it, I'm happy with ourselves, something happens. So we'll leave it like that. Then it's the backlog. And this is what it is by year-end, so by end '23, we had close to $2 billion in backlog. Then we have won $250 million more in first -- not in first quarter, but in January and a few days into February. So we -- you could say I think we have now backlog of around $1 billion for '24 and somewhere between $800 million and $900 million for '26. Of course the visibility -- for '24 and serve the visibility for the next 2 years. So it's very high. And then this one -- no, not this one, I'll jump now -- there you are. This is showing the, let's say, the cyclicality in the when we get evolved. So some periods are very high and some periods are much lower. So what we are saying now is that we believe first half '24 will be a record high for us in order intake. And of course, we base that on what we all are evolved in the first quarter. But of course, also the big tenders we are working, especially on the pipelay tender in Brazil and anchor handling tender in Brazil, where we have bid 5 vessels on 1 and 3 vessels on the other, yes. So we expect that backlog to increase a lot during quarter 1 and quarter 2. And this is a snapshot on some of the recent won contracts. So the Iceman, Kvitsoy and the Hawk is longer-term jobs where we -- 3 years or 2 years. And if you compare the unrealized earnings on those to '23 earnings, we -- you are talking around $150 million, so let's say USD 15 million a year compared to '23 numbers on those boats. So it's a decent jump. So -- and if you look at the asset here, it's an interesting journey. We started the year in '23, in the first quarter on a project in Australia for Beach, where we had an internal rate on -- in the 40s on TC basis on the boat with a slim margin on top. That was a job we won probably in '21 or something, yes. Then we did a job in the [indiscernible] for the Atlantic region, where we had an internal rate of -- in the 60s on TC with a bit higher margin on the subsea component. Then in fourth quarter, we are now working in West Africa with a boat, then the internal rate is in the 80s with a bit higher margin than the previous one. So we went from 40 to 80 in the same year, and the subsea margin went a bit up as well. And then, of course, this new deal here is TC element of 140 a day. But then a subsea part is smaller, but it's just shown here going from 40 at the start of the year and fixing then the boat at 140 at the end of the year. So it's -- you feel like you are running after. So you have to reprice it as fast as you can. And the last one on this slide is the [ Norskan ], which is a big anchor, the 250-ton crane. And so this is done to install an FPSO and an FSO in West Africa, yes. So -- and of course, the pricing on that is high compared to what we had in -- so you see we have not -- we are not allowed to say what the price is. So -- but it's up quite a lot from the previous similar deals, yes. So an interesting is, of course, that with the job of [ Norskan ] now almost sold out in '24. So it's -- so the market is still going in the right direction. The new deals compared to the '23 earnings are much higher and then we expect the -- I wouldn't call it my bad dreams. But in my dreams, I think we might be that we are able to go above $3 billion in backlog, one, if everything goes according to plan. So it's -- I think we will grow that backlog a lot. And -- but I remark that my dreams not always come true. And this slide is showing some of the recent awards just in order fashion, yes. And it's a bit back to what I talked about when I showed a slide where we -- our business model with the vessels on the subsea margins, been arguing that I think that the market value of the assets will continue to go up because we see the payback in the market now -- don't -- is too low for the -- so that is too low for the -- so the value has to come up, yes. And this is just showing from PSV to various types of subsea elements in the contract, yes. So the interesting, of course, is that on these combined deals, if you take the blue, which is the asset margin, we are talking 73%, yes. And then the subsea margin '24. But I guess it's -- the interesting of course is that we have a blended margin through those jobs at 56%. And then we have done so much on the -- based on the market value on the boats, which combined for these are $515 million. And then if you analyze this EBITDA, it's $170 million, so you get the payback combined of 3.2 years. So that's why we argue that at least we don't want to sell assets at 3.2 years payback. So -- but of course, it's a bit -- of course, some of the contracts are many years and so much shorter. So it's -- to analyze this, you have to perhaps take some utilization into account. But I think it's showing the direction and it's showing that we think market value will increase. And we, of course, think that our earnings will increase because we see the margins are higher than we had last time with the deals. So I'll leave it like that. . And then this is a momentous snapshot to tell you how the year have started, how January started, and I don't read all of this. Of course, you have seen we have some quite a few new order intakes. But I think the most important here is that start with APAC. We had a run-through in the region actually yesterday. Yes, yesterday morning. And 100%, 100%, 100%, 100% on all the subsea assets in January utilization. So that's very happy with. And I think the Atlantic, 100% as well, apart from that Skandi Seven have been dry docked. So -- and then in Brazil, the same, apart from mobilized the diving spread on the Carla, yes. So -- but apart from that, 100%. And then in North America, our own boats, 100% and a bit lower utilization on the chartered in boats. But on the chartered in boats, of course, we don't -- we have a contract that is flexible, where we guarantee the owner only 70% utilization on the 2 -- the old contracts we have on chartered in boats. So you could say a very high utilization and compared to our own budget forecast, a very strong start, yes. So that's why we are in an extremely good mood today. So then it's Hilde. Please, Hilde?

First, I want to say that this is the last report you will see in Norwegian krone. From first quarter '24, all our numbers will be reported in U.S. dollar. And as you can see, the operational EBITDA is better than same quarter last year, even though the last quarter '22 was actually a very good quarter, both earnings-wise and cash-wise. And if you see the total of the year, we are more than NOK 1 billion better than the previous year. We have sold some assets, and that's basically 3 vessels. It's a subsea vessel and it's 2 so-called noncore vessels. As you have seen and probably seen in the finance report, we bought 3 noncore vessels from the lenders in third quarter, and we have sold them all, and the net contribution after that acquisition from the lenders and the sale was approximately NOK 85 million for DOF Rederi. It was also an important event in the accounts is the reversal of impairment of close to NOK 1.5 billion and in total, close to NOK 2 billion in the full year. And that's actually a better market. It is that our fair values are increasing and also the value use calculation shows us that the earnings will increase going forward. . The finance cost has gone down, and that's due to the fact that we have a lower debt and we are paying a lower margin on our lending. So if you take what we have paid in interest, it's a big difference, both quarter and year-on-year. If you take the net currency and derivatives, that's a positive amount, and that's due to a stronger U.S. dollar and Brazilian reais -- the stronger Norwegian kroner to U.S. dollar and Brazilian reais, which has reduced the debt, which I will come back to further on, the same impact you saw last year. And also on the tax, it's very special this quarter, and that is due to the fact as the same as the reversal of previous impairments. And that's because we have quite big deferred tax loss in the group, both on a Norwegian company and the Brazilian company in particular. And now part of that has been put in the balance sheet. So that's why we have a positive amount on tax. This time, we show the segment a bit differently. And here, you see the development, and this is the earnings from Rederi Norskan and DOF Subsea. And if I go to the last one, you can see that it's slightly down on EBITDA from previous quarter, and that's mainly from DOF Subsea. You see that DOF Rederi and Norskan is making better money. If I start with Norskan, they have much better utilization and good earnings on their fleet this quarter. If you see at DOF Subsea, the main reason is the Skandi Buzios because as told by Mons, we had an incident in June, and we were covered by loss of higher insurance, the 3 first quarter. But in this quarter, there is no revenue on this vessel. So that has an impact of approximately NOK 120 million for fourth quarter only. We also have had some planned maintenance stop on a few vessels in this quarter and DOF Subsea. If you look at the balance sheet, and if I start with the columns here, it's -- I must admit, I'm very pleased to see that this number here. You see that the equity is NOK 10.5 billion. So we have moved from 1% equity ratio to 34% equity ratio through the year. Main balance impact. Obviously, the assets has increased due to reversal of impairment. The deferred taxes has increased and other noncurrent assets that was reported last quarter, and that's a long-term loan to DOFCON. That's the movement from end of 2022. Cash, NOK 3.6 billion, and that gives total assets of NOK 31 billion approximately. And of course, the equity is already commented. And the short portion of long-term debt is NOK 1.5 billion non-current assets. So I can say that we now have a sustainable balance sheet. . If you look at the cash flow, that's a very complicated slide, but it is -- we have some differences from last year, which is important to comment. Here, you see the main highlights. You see the operating activity, and here, you see the investing activity and the finance activity. But looking at -- if I start with the operational cash flow compared to previous quarter, it was NOK 1.1 billion compared to NOK 1.5 billion. And the difference is actually that we received prepayment from 1 client that actually was a payment for partly the same year, but most of it was for 2023. So that meant we had an exceptionally good cash flow on operation in fourth quarter last year. I hope I will see more of that. But so far, it has been a onetime event, but it was a significant amount. Part of it, but not the main reason is increased activity. Interest payment, obviously higher because we are normal -- we are paying our debt on a normal way. And last year, we had a standstill. You also see that on the full year. And tax paid, that has increased. And that's mainly withholding tax in certain regions, for example, Guyana, West Africa, and it's corporate tax in Brazil. CapEx is NOK 588 million compared to NOK 394 million, and that is mainly maintenance CapEx. What's -- on the debt, we have some special events last year because here, you see NOK 2.3 billion . That is what we actually have paid in amortization and cash sweep and the prepayment. And here, you have a positive amount, which is a reclassification of debt of close to NOK 900 million. In 2022, we had to put that as net of debt. because when we were in a restructuring phase, then the lender could actually take that money. And so that's why it has been classified as net of debt. So you could -- it looks like we actually have paid more in '22, which we actually did, but that is what you see here. So what we actually have paid is NOK 2.3 billion compared to NOK 1 billion in 2022. Yes. And then you have the share issue, and this NOK 152 million (sic) [ NOK 457 million ] that is actually what we paid to get the option on the Skandi Iceman. Iceman was consolidated from before, so that is why it show like this. And Iceman, just as said, was bought at significantly lower than the fair market value of the vessel at that time. So -- and here you see the movement on the cash. If we do the same at debt, so we started the year with NOK 23 billion in long-term debt and NOK 6 billion was the restructuring. So I will not go into that. The cash flow from amortization, that is NOK 2 billion in normal amortization; prepayment and cash sweep close to NOK 300 million, and then you have this reclassification that I just commented on. We have drawn new debt because we bought 2 vessels in the spring that was Skandi Hera and Skandi Darwin. And we have actually entered into long-term lease arrangement for 2 vessels, and that's the Havila Phoenix and Stril Explorer. And then you have the currency impact, which is NOK 786 million. And as mentioned, this is the strengthened BRL and NOK to U.S. dollar. This is -- if you have a long-term view, and what I would like to emphasize here is that even though we have been through a very tough period until end of '21 or mid-'22, we have managed to have a stable margin. But bear in mind, the period you see here, that's mostly TC. And what you see here is a mix of project earnings and time charter activity. So bear in mind, we are an oil service company. So the margin is more or less stable, but the EBITDA and revenue has increased, especially since mid-2022. So what has really driven the EBITDA the last 1 or 2 years is actually subsea activity and subsea projects. And that has resulted that we have managed to reduce the interest-bearing debt and the net interest-bearing debt also after we did the restructuring in March last year. So if we say some words about the silos, as I said, DOF Subsea has achieved a continued high activity and especially some projects in Brazil and Atlantic, who have been -- have had very good performance through the whole year. Atlantic have had some planned maintenance stop and some of the time charter vessel, for example, Skandi Africa, also had a maintenance stop in fourth quarter. And then also good to see that also mentioned by Mons that the Asia Pacific has strengthened their activity or increased activity significantly, especially through fourth quarter. So here at the bottom, you see the utilization and revenue and earnings from DOF Subsea, excluding DOFCON. And of course, DOFCON, here you see a decline in EBITDA, and that is due to the Skandi Buzios incident. In Norskan, we have had actually the best quarter this year. We had, had various utilization on a few wells, especially first half. But you see 96% utilization in this quarter and actually quite good earnings for the owned vessels that is operating in this North sea spot market. So it's good to see that especially the EBITDA in Norskan is increasing from NOK 476 million to NOK 683 million during the year, and you also see the same on this quarter. If you see DOF Rederi, we are experienced the same, and we -- and DOF Rederi also include Iceman, and we more or less have full coverage on the company as it is today. Because these days, we will sell the last noncore vessel, Skandi Captain, which is -- has until now operate in the spot market. She will be delivered next week. This is a busy slide. But what we want to show here is actually here, you see the main terms of the refinanced silos, that's DOF Subsea, it's Norskan and DOF Rederi and Iceman. DOFCON has, as we have said before, not part of the refinancing. So we pay on the refinance facility and margin, significantly below market terms. But the main portion of our debt, especially in DOFCON and Norskan are with BNDES. And here, the long-term tenor goes from 2027 to 2037. And you see here we have a fixed interest rate in the range of 2.2% to 4.2% on the DOFCON facility and 3.1% to 4.4% and that's all-in cost. It's a firm interest through the entire duration of the loan. And the margin on the refinance facility is, I guess that's something you are familiar with. If you see here. Here, you see the EBITDA from the various silos. And what I'm particularly happy about is, of course, if I take the weakest part first, which is Norskan. And here, we see we have a net interest-bearing debt to EBITDA of 7.6. And that is -- it's good to see that we have an increasing EBITDA. And we expect that -- we expect and hope and that will continue for Norskan going forward. If you see the key figures for DOF Subsea and DOF Rederi, we don't see that we have an issue when it comes to refinancing. And that is what we have shown here. I think in the next quarter, it might not be necessary to show this slide because we see that our refinance issue or refinancing plans, which we have to do in -- by '25 is becoming less and less a concern. For example, in DOF Rederi, we don't see that we have any refinancing needs. So which company do we need to refinance? That's DOF Subsea and it's Norskan. It's part of the debt in Norskan, approximately NOK 100 million in Norskan and the rest in DOF Subsea. So if you assume that our EBITDA is more or less fixed the next year, which we don't expect, I assume, and then -- and here, you see cash sweep on a stable EBITDA. We see that the refinance risk is approximately $400 or lower. So that is what we consider not as a risk. And here, you see the long-term debt maturity profile and what we are paying in interest in the various silos. I've already mentioned the cheap interest that we have. On the bond loan, as you know, we have a peak interest, and we have the right to convert by end of 2027. Thank you. .

Thank you, Hilde. I guess what I forgot to say in the start was that we will, at the end of the session, open for questions. And so on the webcast, we will take questions in writing. And then we have some people in the audience here that can -- will get the microphone and can ask questions. Sorry for that, but there's still time down to ask questions. Yes. So then we are on the guiding for '24. And I guess if you start with the history, it's because on '23, we -- I think we started the year where we're guiding NOK 4.2 billion to NOK 4.7 billion in EBITDA. And we ended the year at NOK 4.872 billion. And we are doing -- and that was done at the same time. So it was done in February '23. And now we are doing it for '24, and we then guide $470 million to $520 million in EBITDA. And of course, we know the first 12 months. So we have 1 out of 11 months in the bag. And of course, the first month is giving us reason to believe that we will be able to deliver at least something started with a 5 year. But it was -- we have 11 months more to go. And of course, we know when you operate -- an old friend, Mr. [indiscernible] always said, if you have a friend and want to be not having a friend anymore, you give him a boat. And because a boat has a lot of things that can go wrong, yes. So we are in operating vessels globally. And of course, we know there will be surprises. But we also know that from time to time, there are surprises on the positive side, yes. So I said earlier that I will be disappointed if we don't deliver stronger in '24 than in '23. And I hope that we are conservative as it was last year when we are doing this guidance. But I know we are in an industry where you can't guess surprises. So that's why we have ended up on this interval. And -- but I probably understand that I will be disappointed if we don't deliver, let's say, on the upper end of this year. So that was a long story about the EBITDA. And of course, on the depreciation is, they are up. But of course, that's a natural effect of the impairments, the reversal of the impairment, yes, you have more to depress. But of course, as I say, in my view, of course, is that the asset value will continue to rise. So really what you depreciate? I guess what is important is what is actually the value of the fleet. And then I guess the next one is just the maths on the 2 first ones, the 3 first ones. So the net operating income. And interest cost is -- we have estimated $90 million to $100 million. And then payable tax, I'm not a tax expert, but around $50 million. So -- and the CapEx more or less on the same level as last year. So -- and then hopefully, we can surprise on the upside on the earnings side and surprise on the down side on the cost side, yes. So let's see. Let's see. And then it's a last slide and to be there, I don't repeat the guidance. We have high backlog. And of course, we expect, as I said, big awards in the next few months, yes. So it's a lot of tenders, a lot of big tenders. And of course, we do believe we can build actually visibility well after 2025 if we get this goes according to plan. And of course, the pictures drawn here are of 2 boats. The 1 is pipelay in Brazil. And of course, as you know, there is a live tender in Brazil, where we have bid 5 of 6 boats and it's all 3-year contracts. And of course, if we land contract for 4 or 5 boats. Of course, you have backlog for that --- those 6 periods is to '27, '28, '29, so which will then build visibility for the group into -- long into the future. And likewise on the anchor that we have bid, and of course, this is Norskan. Hilde showed very good numbers for Norskan in quarter 4. And of course, we hope we can establish that run rate going forward. And of course, we have bid 3 of the anchor in Norskan on an anchor handling tender, 3- or 4-year contracts. And of course, are in the middle of negotiations now. And because if we land those at the level, we close to where we are bid. Of course, it will lift the earnings in Norskan compared to what we -- the average for what we had last year, yes. So we are hopeful. And then, of course, we saw already we have won $250 million so far this year. And so there is momentum on these big tenders. But also, of course, a strong momentum on project work, shorter work globally. And as I said, we have had a fantastic utilization apart from planned maintenance and mobilization of equipment in January. And of course, we expect that to continue. So it's strong. And I really enjoy what we call a BA calls, which is business acquisition calls. And of course, it's -- that is a fun part of my life these days because it's so many opportunities and so good margins. So I'll leave it like that. So then we also have our Chairman with us, Mr. Svein Harald, and he will do a few slides. And then after him, we take this session with questions, yes? So please Svein Harald.

So, thank you. I'm Svein Harald Oygard, I'm the Chair of the Board. So my plan is to go through a bit the thinking on how to create shareholder value in DOF and the philosophy of the Board as to how we can extract further value from the Board -- from the company and from the shareholding of the company. And why am I doing it? Well, this is partly because I think the DOF story is quite special on the Oslo Stock Exchange. I think there is nothing similar -- we are a bit outspoken on it. So what is it that we have? Of course, we have for element sort of value creation strategy. Most of it shouldn't be a surprise by now, but I will still go through it very quickly. So first, on the EBITDA, as shown by the guiding, we believe there is a further upside through high uptime and constant delivery, of course, in a stronger market. There's a high value from the vessel, which, of course, reflects the vessel portfolio that we have, that is, of course, excellent. And it's well maintained through the downtime, which is also remarkable. And on top of that, we get the value from the technology from projects and solution sales. So it's more than the steel. It's sort of smart people working with smart steel. And that, of course, supports the value creation story of the company. That allows us to extract project margins -- while at the same time, we avoid the large-scale turnkey risks that often plagues the part of the oil service business. So we get high earnings, but at a stable level. And within the project sale, our main focus is IMR and decommissioning, where it's a pretty well-defined scope without these immense risks that some other companies have been troubled with over the last years. With that, of course, this is for the market to decide. But what we, of course, can do is to strengthen the EV of EBITDA by delivering on the strategy, by showing consistency in our delivery compared to plan. And of course, we do start from a very, very low starting point given history, even suggest that should indicate that there is a story. But this goes up to you what you consider to be a fair valuation. But it is actually something to work on simply through the consistency of our efforts. Then the debt is, of course, it's a challenge, but it's also actually an opportunity. And I'll dwell a bit on that. Of course, with a high EBITDA, we can accelerate the debt repayment, and that's also the part of the structure to the cash sweep arrangement. The modest capital expenditure that we care because the vessels have been very well maintained, as I mentioned. There's no -- in other industries, part of the oil service segments, when you take them out from -- yes, when you put them back in operations, you will often incur capital expenditure, not so in DOF because they all are operating. And of course, we have a below market interest rate on our debt, and we have the tax loss carry forward that actually also then becomes a significant asset of the company. I will show afterwards that the mark-to-market value of our debt portfolio is NOK 1.6 billion, which is actually in itself NOK 10 per share in its current structure. This, of course, allows us to extract benefit to equity holders from the tender structure and the interest rate structure on a debt. Then, of course, as we have done, if we get the right price, you will also sell vessels. But of course needs to be high relative to the EBITDA that we can now earn on the business. And with EBITDA going up, it's harder to find a vessel to sell, especially as the vessel prices partly don't reflect the earning potential of the vessels. And of course, we want to high grade the portfolio of vessels. So divesting the ones that are less important to our future business. And who knows at some point in time, considering other opportunities on the vessel side. With this, with EBITDA going up, with the EV of EBITDA hopefully going up, debt going down, part of the enterprise value that's owned by equity basically will go like this. And this is what I -- you should run the numbers and see what kind of numbers you could get. I will not give guidance on this, but I can tell you there are some interesting elements here. Hilde touched on this, and I will go a bit more in detail on the capital structure. This is the current capital structure. And it's in different silos, as we call them, in the Norskan silo, in the DOFCON silo, in the Norskan silo, in the subsea, and then on top, the Rederi. So basically, this runs forward. And of course, with the cash generation, we will do the cash sweep. So by the time we get to the time for the possible refinancing the debt should be at a way lower level. This interest -- this debt runs at this all in nominal interest rates. So it's basically in the first year, it's around 6%. But then it goes down to 5%, 4%, 3%. And not to have debt that runs to 2033 at a 3% interest rate. I guess that's an asset in some sense. And it's best to have that as a part owner of the enterprise value as compared to having other equity holders. So that's one of the reasons why you get this immense uptick. The net value of this, if you compare the debt, the terms on the debt to market rates is, as I mentioned, NOK 1.6 billion. So in sense, if you look at EV to EBITDA comparisons for different companies, I guess, the fact that this element is part of the story is something to take into account. But I guess there are far smarter financial analysts in the room than me, so -- but have a look. Another part, if you spread this out over time, you have the following setup. So because since the debt is higher at the starting point, that's where you have -- this is the value of the spread to the market interest rates, basically allocating out the NOK 1.6 billion over time. But one part is that even a large part of this is very long term. That's basically something that we can live with for future. So there is a significant mark-to-market value on the interest rate differential. The main part of it actually originates from the non-constrained or basically from the part of the debt structure that we don't need to refinance. Basically, these elements at the bottom. So we can do the refinancing as we should, of course, of this part, but then we can still retain the inherent value of the debt portfolio for the long term. If you do a accelerated refinancing, as we probably will do early 2025, then, of course, you will reduce this latent interest rate value. But since this is the part we are sort of losing, that should be less than 10% of the NOK 1.6 billion. It's a bit similar to the company -- the story that I have in other company where I'm the Chairman in Norwegian. I guess you have seen the discussion the last day. Should we repay the zero interest rate bond, the so-called retained claim bond? One guy means that -- thinks we should do it. I think, in general, of course, you shouldn't do it if you have this very, very advantaged term. One part of this is that this debt in the silos that Hilde showed, of course, it's a pain because you have all this somewhat restriction. But it's actually also a benefit because you can work on the silos independently. And the 2 silos with the long-term debt, with low interest rates, that's the Norskan and DOFCON. And they can basically run forever. And while the debt ratios in the 2 others, in Subsea and Rederi are way, way lower. And that gives flexibility. That gives us the chance to, as I said, retain the interest rate benefit for long term, which is then in Norskan and DOFCON. At the same time, optimizing the structure in the 2 other silos and even on the margin paid dividend. So when you look at this, you have to go beyond the average debt ratio of the company. It's very high again because of Norskan, but that doesn't really matter because from a financial point, because the other parts which is really low. So I brought just maybe too much time on this, but it's, yes, NOK 1.5 billion, that's money, too, even today, months, right? Even with the rates you get on the vessels. And then I could do something which is totally inappropriate, which is basically comparing DOF to other companies in the oil service space. So basically, if you look at these have been stolen from DNB. So if you look at the EBITDA of the entity, of DOF, which is the black here compared to market value, you can see that we are in the high range and among all the -- these are all the oil service companies in Oslo in seismic services and drilling. So we are in the high range. But then we are very, very low on CapEx, which is again a reflection of what I just said on the vessel portfolio. And despite our high debt, we are actually very low on interest payments. So you take the EBITDA, less the CapEx and less the interest payments. And it will be even more if you included the tax element, I would believe. So basically, the cash generation of the entity as EBITDA less CapEx interest rate compared to market cap is then the highest on the Oslo Stock Exchange in the oil service space. This is something that because we'll work on. And the 3 main kind of elements from a kind of strategy to strengthen shareholder value is, of course, to maintain the momentum, to strengthen the earnings and to build value from the vessels and beyond the vessel value, is to continue to repay debt at the accelerated pace, as we are doing, while to the extent possible, retaining the interest rate benefit to the benefit of the equity holders. And the first silo will have a -- in assets case, a debt ratio below 1 already in 2025 and maybe in '24. Who knows? . So with that, that's my last points and then on the Q&A. I guess that's to Mons and Martin. Thank you. .

Martin, you will ask the questions from the webcast and you guys here in the room will ask the questions on your own . You don't need help from Martin doing that.

Okay. I can start [indiscernible] ABG. Now the Board -- both the Board and the management is here. So what I'm -- my question is now that we've started to see some companies, some vessel owners in Norway build new vessels in the subsea space. And you may be at 1 year from a refinancing, which would -- could limit restrictions on expansion or dividends. How should we think about DOF in that context? Should we expect growth to be the main strategy post refinancing or shareholder distributions? Maybe you start on the new builds? .

No, I see it in a way where, of course, we -- of course, when we get the freedom back of the -- when we have refinanced next year, we -- the priority #1 is to pay back value to the shareholders, yes. And of course, on the new builds, costs will be very few. And of course, you see if you order today, you go get it in, let's say, late '26, '27. And of course, when you did -- do the maths on the rate these guys are getting and the price they are paying is nothing near something we would have done. You can buy, let's say, DOF here at [indiscernible] or quality companies at 3x or 4x the '24 EBITDA. And then these guys are paying 8x the multiple in '26. So I know we have been stupid before. But of course, we are not that stupid that we don't learn from our earlier stupidness. So we will not do that. And so we will pay hopefully, dividend and then we will do deals that is, let's say, increase the value and don't decrease the value over this year. So that's how we see it. And of course -- so that's the answer to that, yes.

Okay. We'll do one from the webcast. And you are expecting a better market for the anchor handlers with more term contracts. Can you say a bit more on where you see this increase and whether you expect anchor handlers to be taken out of the North Sea to serve a global demand? .

Of course, we can start, of course, with Skandi Iceman. And of course, it's an entry where we adjusted 3, plus 3-year contract. And as we said, we -- on that alone, I expect if you compare the Iceman's '23 EBITDA to the annualized earnings on that job, I think we are up from, let's say, the $7 million, $7.5 million EBITDA in '23 to perhaps $13 million, $14 million level on the annualized contract. So of course, that tells you that, number one, she is a fantastic boat because we know that competitors, of course, bid their boats at much lower rates, but they took our boat because we have the best boat. And of course, that is, has always been for DOF, that we have the best boats. We build them a bit more fancy, but we -- and we see we get the premium on that. So that is telling where the market is. And then, of course, we see that Petrobras on tenders for a lot of boats. So once there is an international lot on that, we expect, of course, that they need more boats. But we also see that the rate levels, the owners outside Brazil ones and also the owners in Brazil not often or not always match the expectation of Petrobras, yes. So that, of course, this is why this anchor handling tender. We have bid now in striking on because there are some good discussion between Petrobras and the owners on a [ gap order ] rate. So we see increased demand for anchor handlers in APAC. We see it in Brazil, and we see it gradually in the North Sea as well. And we also see it in West Africa. So we see opportunities globally for the boats. And of course, we expect, when we do our next long-term anchor handling contract that you will see the same trend that we saw for Iceman that you will have really nice jump in earnings on that boat. So I think -- but of course, the anchor handling market is the most difficult market to break. If you ask me what rate will be in the spot market in North Sea next week, I have no idea. But I think my stomach tells me that the anchor handlers now are soon going into the same trend as we have seen for PSVs and Subsea boats. So we are on the limit in my head to see that market really going in balance. And then, of course, there will be a super profit on that space as well. But I emphasize, that's my stomach. My brain tells me, no worry about rates, that will be in that market next week. But at least I see there's some signs that this is starting to look good, yes. That was a very long answer.

Erik Aspen Fossa, Carnegie. I have a question about the guidance. You say you would be disappointed if it doesn't increase year-over-year. I'm just wondering what you think needs to happen in order to kind of reach that high end of the range? Is it like if nothing goes wrong, it's possible? Or do you need to see rates increase or just stay at current levels? What do you think?

I kind of like your question. And of course, you heard what I said, yes. So last year, we guided 4.2% to 4.7% and we delivered 4.9%, yes, roughly. And of course, we hope we are conservative this year as well. And so if it goes according to what I hope for, of course, we're going to deliver [indiscernible]. And if it goes very nicely, of course, we will deliver broader guidance. But as I said, there is always things that can go wrong technically and so on. So that's why we have a range. So that's why we have the range. And of course, we try -- we hope we are conservative on the guidance this year as it was last year, yes. And now I will not say anything more.

Got it. One more question on the -- I'm just wondering if you could go in a bit into rather Petrobras tenders and what's going on there? And if there's like anything you could say when we could expect those to conclude? And then also thinking about you have at least 1 PSV [indiscernible] of the firm contract in August, I think. What's going to happen with that one if it continues to drag on?

The last testing first on the PSV, of course, we fixed, and I think you are referring to [indiscernible], that comes off in the fall and working for Exxon in Australia. And of course, we fixed the sister vessel just now in Australia. So what I would call the world record in 2 PSV rates. I never seen anything like it. And so I expect that the boat you are referring to will get the same [indiscernible] did on 2 contract. You didn't mean PSV? No, you said on your first question where I told you because your first question was on PSV, so I thought the last question was PSV. But the PSV of course, we are bid, we have fixed pipe layers, yes. So there are 2 coming available in August this year and then some in '24 and then 1 in '26 and then 1 in '27. So we are bid the first one on this tender, yes. And of course, we are in the middle of discussions, yes. And you could say making some progress, but still moving slowly. So -- but our view on it is that there was -- we believe Petrobras needs all the boats they have, and they want a bit more than what they have on contract today. And see if -- so our base case is, of course, that we will do an extension or a new contract on all the 5 boats we have bid. The last boat is outside the window and meaning that boat will just continue for Petrobras from August. And when it will conclude, it's -- it takes time -- it take, yes. And that's just how it is. And if this is, it could be that you can reach agreement on some of the boats in a week or two and it can take a month or two. So I couldn't tell you. It's just to be patient and see what happens. But our view on it has not changed, yes. And likewise, this anchor handling tender for Norskan, of course, it's extremely important. And we do believe that we're going to do a contract on all the 3 boats we have bid, we do believe that the rates on that tender is quite a bit higher to what earnings we have today. So we do believe that, that will move -- lift Norskan to a much higher run rate. And of course, then -- so that is what we still believe. So no change in that. But on timing, I've been now in this business for 24 years. And in the old days, Petrobras already had -- they had Board meeting on [indiscernible]. So then people will be asked our guys in Brazil, when we got the decision on the next Thursday, next Thursday, next Thursday. So let's see. But I am optimistic on that.

Then we will have time for 1 more due to good lengthy answers, Mons. [indiscernible] Can you give a brief update on the status and when they will be expected back in Brazil?

She is at the yard here in [indiscernible]. And she will leave that yard in April, going to hold on and take on board because we lifted off the tower to do repairs below the tower in Iceman facility in the Netherlands. And then we put that on, and then we sail for Brazil. So I would say back in Brazil, yes, let's say, you leave -- so let's say late June, early July is my best guess. And then so perhaps on the over contract in [indiscernible], if it goes according to plan. So then we are done. So thank you very much for listening to us. And then we are at least talking -- then we have done first quarter. So thank you very much to all. .