Bonheur ASA
OSE:BONHR
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Bonheur ASA
Earnings Call Analysis
Q4-2023 Analysis
Bonheur ASA
The company has experienced a notable decline in revenues, specifically within the renewable energy sector. This has been attributed to a significant drop in prices, leading to a steep revenue decline. Despite a 57% fall in energy prices, which would typically result in a similar decrease in EBITDA, the company's EBITDA drop was contained to NOK 378 million thanks to reversing the ETL and solid commercial performance in green certificates and operational expenditure control.
In the renewables segment, the company successfully completed the Teboliden 2 project and made progress on approximately 4 gigawatts of assets in the development phase. Additionally, they are now poised to move more than 500 megawatts of consented projects into construction. Despite lower wind generation in the fourth quarter, and the entire year of 2023 underperforming due to low wind, the company maintained focus on operating efficiency and maturing its project portfolio.
The Codling project, a significant focus for the company, has seen considerable derisking throughout the year. Notably, they secured a route to market with a CFD awarded in mid-2023 for 1.3 gigawatts, representing 43% of the total auction volume. The CFD comes equipped with 20-year duration and full inflation protection until the Final Investment Decision (FID), followed by 30% protection thereafter. Although the time frame remains critical, the company approaches the supply chain with creativity to maintain the momentum of the project.
Operations across the Marine Service segment have been stable, with vessels such as the Bold and Brave operating on designated projects, and the inclusion of the Blue Wind Shimizu vessel as a highlight. The company passed a milestone of a significant number of turbines installed and reported a top-three quarter in terms of performance, with an EBITDA reaching a new all-time high of EUR 98 million for 2023, exceeding the previous year's record of EUR 77 million.
The company's cruise line sector has seen an increase in occupancy from 64% to 71%, indicating a rebound in market demand. However, efforts are being made to continue driving occupancy and enhance the value of their product offerings in order to boost ticket revenue and service levels. Despite this, a positive EBITDA outcome was reported, and the booking numbers for future cruises appear promising, particularly during the peak wave season post-Christmas, when customers engage heavily in booking cruises.
The company boasts a robust balance sheet, adhering to its stated financial policies. With a cash balance of NOK 4.6 billion against external debt of NOK 3.5 billion for entities 100% under the company's control and a strong position in cash versus debt in subsidiaries and joint ventures, they are in a favorable liquidity position to support ongoing operations and potential future investments.
The company addressed concerns regarding curtailment compensation practices in the UK. They explained the curtailment mechanism as a balancing act mandated by the government and confirmed compliance with National Grid's procedures and forecasts. While under scrutiny in a press article, the executive team clarified their stance, ensuring stakeholders that they are operating within the established framework and emphasized their commitment to integrity in curtailment practices.
Despite facing industry-wide challenges such as rise in interest rates, inflation, and supply chain disruptions, the company remains optimistic about the future of offshore wind. Recent government announcements in the UK, particularly the commitment to support floating wind and establish a separate CFD auction for such projects, have been viewed as positive developments, reinforcing confidence in the sector's potential and the company's strategic position within it.
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Good morning, everybody. We are here to present the fourth quarter results for Bonheur ASA today. My name is Anette Olson. I am CEO of Fred Olsen & Company and Bonheur. And with me today, I have Richard Olav, who is our CFO, and he will, as usual, to the presentation. In addition to that, we have the CEOs in each of the daughter companies that will come forward to present.
I will start informing you that we today have 2 of our CEOs that will present for the last time, Ivar Brandvold, who is responsible and CEO for Fred. Olsen Renewables is now handing over his position to Sofie Olsen Jebsen coming from Fred. Olsen 1848 and she will take over the helm on the first of March. Ivar has done a great job, and I'm very happy that he is going to continue with us as special consultants.
In addition to that, Alexandra Koefoed, who has been the CEO of Fred. Olsen Carriers is leaving us unfortunately. She has done a great job in main carriers. She is giving the helm to Hakon Magna [indiscernible]. Both of these candidates are internal candidates. And. We are very happy with this.
It's very nice when we are able to get candidates internally. Alexandra has done a great job, and you will hear the good results. So next time, we will certainly have the 2 newcomers talking about each of their areas. Sofie is now handing over the helm of Fred. Olsen 1848 to Peridabid Holt, and you will meet him next time.
So with that, I think we will start, Richard, the floor is yours.
Yes. Thank you, Anette, and also hearty welcome from me this morning. I think before we go into numbers, I'd just like to reflect on the numbers. We have had a solid end of the year. If somebody had told me 12 months ago that energy prices would be 57% lower fourth quarter '23 compared to fourth quarter '22 and we still will have an EBITDA in the fourth quarter of NOK 1.1 billion, I wouldn't have believed it.
So I think all units have done a good job at the end of the year, and we landed the year in a very good way. So by that, we can go into the numbers. So point your attention to the right of this slide. Operating revenues in the quarter were NOK 3.5 billion, while the EBITDA was, like I said, NOK 1.1 billion. It is down due to the energy prices from NOK 1.284 billion, so NOK 470 million, but given the drop in energy prices, there is solid improvement on many other characters.
I will comment more on the EBIT and the net result on the next slide. So we can go through segment by segment, and I will take it brief because we have a more thorough introduction and information from the CEOs on each of the segments. But starting with Renewable Energy, which then on the back of very strong energy prices, fourth quarter in '22 had an EBITDA of more than NOK 1 billion and an EBITDA of NOK 638 million this quarter.
You would expect a much sharper drop in the EBITDA with a 57% drop in the power prices, and I will come back a little bit more to how that reconciles. Fabrinet completed. And on the Seven side, with large [indiscernible] We have very important and I would say, creative challenging work ahead of us in both Codling and Memo on delivering solid future-proof consent applications. Lars will cover that.
Then in service, fourth quarter normally a weak quarter with the winter season, not fourth quarter in '22 and not the fourth quarter in '23. An EBITDA of more than NOK 400 million in the fourth quarter of the wind service segment is higher than what we would see in the season. A lot of reasons for this. Very good performance out in the Far East with the 2 vessels there. Also the new Shimizu vessel have done a good job, first contract there. Alexandra will come back to that. But also good operational performance on the project in Europe.
And also stronger results in both GBS and UWL this quarter than fourth quarter last year. So all in all, a good quarter on the in service side. And Alexander will comment more on the contract side than the backlogs and there are more news there. Then the unit that surprised the most on the upside is cruise from an EBITDA loss of NOK 94 million fourth quarter '22 to an EBITDA of plus NOK 133 million. That is by far the best fourth quarter result Cruise ever had. Of course, there is a special effect in the numbers that we have sold Bemar and had a gain of NOK 86 million on Brem, which is part of the NOK 133 million. But even correcting for that, I have not at least on any fourth quarter numbers on the Cruise lines that even corrected for the sale is stronger than the fourth quarter this year.
And this is despite that the vessels are not at all full. The occupancy is only 71%. So there is a lot of room to grow the. The occupancy on the 3 ships we have and also the net ticket income is lower than fourth quarter last year. Explanation for that is that there are longer cruises in the mix this quarter and longer cruises typically commands less prices than shorter cruises.
Other investments, EBITDA of NOK 68 million, which is down from SEK 44 million. The only thing there is that we use more money on technology development in 1848 but well within plants and Duchting unexpected there. EBITDA for NHST came in a little stronger than fourth quarter last year.
Then I would like to point your attention to the parent company. The news in this quarter is the dividend proposal from the Board of NOK 6 per share compared to NOK 5 last year, which is a dividend payout proposed of NOK 255 million. After correcting for the dividend, accruing for that, the equity in the current company is about NOK 8.5 billion, which is an equity ratio of 70%. And cash in Bonner is close to NOK 3.5 billion by the end of 2022.
So going a little bit more into the details on the consolidated financials. Revenues are up. That is largely due to Cruise and the Shimizu vessel. I'll come back to that. I'd like you to point you also to the OpEx. It seems from these numbers that we are increasing OpEx to a large extent of SEK 400 million. That is related to 2 things. It's related to the Shimizu vessel that comes in with both revenues and OpEx, giving an EBITDA contribution, but it's also more OpEx increase because we have more cruise days, more passenger and then more OpEx but generating an EBITDA while the prices on electricity is hitting directly into the revenues. So OpEx in other units are more or less as last year.
Then there's also a special effect in the number this quarter, and that is the NOK 57 million reversal of the high price levy accrual. The U.K. government introduced when the electricity prices skyrocketed and levy for electricity prices above a certain threshold. That levy is calculated on an annual basis, so it's impossible to know the final levy before the year ends.
So what we do every quarter is to estimate the power prices for the rest of the year based on the forward curves and so on and accrue according to that. So when the power prices go higher than the estimates, we have to increase the accrual. When they go lower than the estimate, we can reduce the accrual.
And in the fourth quarter, the power prices continued to fall in the U.K. So then we can reduce the accrual and reverse NOK 57 million out of the accrual, contributing positively with NOK 57 million to the EBITDA. Depreciation, nothing a normal there, basically currency effects. And then I think we have been more granular now than in the past to continuously impair development projects that we see would struggle with financial profitability.
We have a huge development portfolio and some of these projects will have problems on the way. Some a more granular approach and having small other impairments than chunks on a more infrequent basis. Net finance require an explanation this quarter.
We had net finance costs of NOK 179 million in fourth quarter '22, while we have net finance costs of minus NOK 361 million this quarter. This is in all material aspect related to the interest rate swaps on the Scotlish wind farms. We are financed long term on the Scottish wind farms and it's a requirement from the banks that we hedge approximately 75% of the interest rate exposure.
Those swaps that you do from floating rates to fixed rates. We have to take mark-to-market into the account every quarter. So when interest rates in the U.K. go up. We have a large unrealized gains on these contracts and when interest rates go down. There are large and realized losses and a point unrealized.
Still, we have in the balance sheet, approximately NOK 220 million accumulative gain on these swaps. So it's a negative correction in this quarter, but all in all, since we enter the loans, we have again, gain of around NOK 200 million. But this cannot be realized because it's a hard requirement from the banks that we hedge the interest rate in the U.K.
Yes. So on the tax cost, nothing normal there. We pay taxes in Taiwan and the U.K. Good activity and good profits in Taiwan, rather taxes there. So I think we can move. Yes. On the revenue side, we can see it here, the steep revenue decline on renewable energy due to the drop in the prices, but I think renewable energy or Foras in particular, has been very good on working with, for example, the legos, renewable obligation certificates and so on to offset some of the drop.
In service, the revenue driver there is really the Shimizu vessel comes in and also good revenue performance in Global Services. And Cruise lines, of course, more Cruise days and higher utilization of the vessels. Yes. On the EBITDA, we see an EBITDA drop in renewable of NOK 378 million. And with energy prices going down 57% and energy and pricing going straight to the bottom line, you would expect a much steeper drop.
Of course, we have the reversal of the ETL, that helps. But also a good performance on the commercial side from Foras on, for example, green certificates and also reasonably good OpEx control in the quarter leads to a much less change in the EBITDA than you would expect from the prices.
In service already commented upon and also the big swing on cruise lines, which comes from both operational improvements and the sale of Balmoral.
Yes. Finally, on the balance sheet, the cash and the debt situation of Bonheur and the main subsidiaries. We continue to follow our financial policy laid out in our annual report. This quarter is also a strong support of that, that we walk the talk, our policy. We can look at the numbers. And for the entities, we -- Bonheur controls 100%. We have a cash balance by the end of the year of NOK 4.6 billion, up against an external debt of NOK 3.5 billion.
Bonheur ASA plus some other minor entities here in Oslo, around NOK 3.5 billion in cash and around NOK 2.8 billion in debt. We see Cruise lines now were generating cash. So they have actually no same cash position as they have in external debt, and that is related to the seller credit to whole America line.
Wind service also generate good cash and almost now close to a cash position up against the loans on Brave and Bold. And Renewable Energies still fit with a good cash position even with dividend at about NOK 650 million from renewable energy to Bonheur in the fourth quarter, still NOK 368 million, which is controlled 100% by renewable energy.
In
the joint ventures, where we really take on the leverage, the joint ventures, the external debt is exactly as planned at NOK 5.2 billion and a cash position of NOK 362 million. And the other items on wind service that is mainly then the UWL partnership and the Blue Tern vessel. We see also that good cash position compared to a debt position of big. So I think that takes me to the end of my presentation, Annette.
Thank you, Richard. We will now present for Renewables and Ivar Brandvold, please.
Thank you. Thank you, Annette. Good morning, all. It's been a rather dramatic quarter in renewables. The most notable change in the portfolio has been that we have -- we completed the Teboliden 2 project, and that has been moved from construction and into the operating box to the right and the capacity is included in the Fabien capacity.
And you can see to the bottom right, lower end, we continue to mature our assets in the portfolio, and we are maturing around 4 gigawatts of portfolio in the development phase. And we have a little bit more than 500 megawatts consented and the target now is to move the consented projects into construction. And of course, it also is to maintain focus on operation and to improve the efficiency at any point in time.
Apart from the Fäboliden 2, not a big change on the portfolio side this last quarter. If you then move to the market, I can -- we have 4 graphs here, and I'll start with the upper left, where we see the generation and the fourth quarter was rather low wind generation, and we saw a rather low in generations through the entire year. So 2023 has been on the performance side when it comes to the generation dominated by the lower wind.
If you go to the upper right and you look at the market and the main drivers there and you then see the gas prices have dropped since the spikes in 2021 and 2022. And the reason for the drop -- the main reason for the drop now through 2023 and in the fourth quarter is that there is a lower consumption of gas due to lower power generation on the gas-fired power plants throughout Europe and the U.K.
You can also see a drop in the coal prices into -- through 2023. And the main reason is that there is a record high inventories on the coal. And you can also see there is a slight drop in the carbon pricing through 2023, and that is on the back of lower usage of fossil fuels in the power generation and that has been offset by nuclear and by wind in general.
And if we then also look at the Högaliden balance in the Nordics, in Scandinavia that is in our case. And you can then see that through the entire 2023 it's been relatively balanced, and it's around should we say, normal levels. So on the back of this, we have also seen that the power prices have dropped from the high levels in 2022, as was mentioned by Richard to a more stable level through 2023.
And even during this winter, we see relatively stable conditions. The power prices in Sweden is at about the same level as before the pandemic and the rise in 2021, 2022. In U.K. and in Norway, we see stable prices but at a little bit higher level than we have seen before. So then moving into production, you can see on the right-hand side, just the table of the capacities that we have installed on all our wind farms.
And to the left, you see the increased orders, see the power production of power generation through the years from 2010. And as you can see, the 2023 was a rather low; and on the right there, you see 2024 will be then the forecasted P50, the 50% expectation level for this year.
And then finally, to construction, we completed the Fäboliden 2 project in the last quarter, and I'm happy to say that we completed a project within budget and also 1 month ahead of planned operating dates. The Fäboliden 2 consists of 4 Vestas turbines of 4.3 megawatts and has a maximum TPA to 230 meters, have heightened of 155 and they are the oldest turbines that we have installed and you can see a picture then from the Fäboliden 2 area to the right. And the picture is taken from top of the vessel on one of the turbines. Beautiful teacher, I would say.
This will be my last presentation. It has been a pleasure, and I have really enjoyed also participating in these presentations. So thank you.
Thank you, Ivar. I'm sure you will have some questions at the end. But next one out is Lars Bender, CEO of Fred Olsen Seawind.
Thank you, Anette. Yes, and I will give you a presentation of the quarter for 4 for Fred Olsen Seawind. And if we go to the first slide. Thank you. I think it's more than 2 years ago now that we started and spun out Fred. Olsen Seawind. And I think as of today, we stand on a very solid platform of projects, but also a solid base of a good team and future prospects. And I think overall, '23 has been a good year in consolidating the platform we stand on both. In Ireland and in Scotland, we've seen significant derisking, and we've seen significant achievement of milestones, which I'll come back to for those 2 markets.
The market where '23 probably hasn't been as expected, has been Norway. During Q4, we saw another delay in the submission deadlines on [indiscernible] We also have seen during -- in that quarter that Ørsted have decided to withdraw from several markets. That includes the Norwegian market. And of course, the fact we were in partnership with that means that we now, together with Haron, will continue in Norway with them.
We still remain committed to the Norwegian market. The fundamentals in Norway are still good, strong wind. We have a strong supply chain for floating and also overtime, a need for power in Norway. So the fundamentals are there, but we also need during '24 to see progress on the governmental side and probably more predictable frame conditions.
But I thought I would go into more detail with the core markets. So Codling has, during '23 and '24 developed very positively. We've had significant derisking of that project. I think there are 3 major milestones, which we've seen over the last year. First of all, we have a MAC, maritime area consent, which is the exclusivity to develop the project.
Second, we have access to grid in the magnitude of the size of the project. And third, very importantly, we secured a route to market with a CFD mid-2023. So overall, significant derisking of the project, which, of course, is very positive.
On the CFD, just to recap, we have been awarded 1.3 gigawatt in the auction last summer, which is equal to 43% of the total volume in that auction. It's a 20-year CFD and very importantly, in the environment we are in right now, it has inflation protection 100% until FID and 30% through the period of the project.
So overall, a solid project with solid fundamentals and from our perspective, significant derisking over the year. Looking ahead at '24, we are looking towards submitting a consent or a final consent application during '24 in Ireland for the project, and that is the last of the derisking milestones before the project is ready to take FID.
So positive developments. But of course, also in the environment we are now, it requires creativity around supply chain, and how we enter into commitments during the course of a project like this.
If we then move to Scotland. We have also, during Q4, seeing good news. The U.K. government confirmed in Q4 that there will be a floating port or a separate floating part for CFD, which, of course, has been one of our main assumptions for our project in Vivara. It basically means that the project we have will only compete against other floating projects and not bottle fixed. That is, of course, important for the value of the project, but it's also important to get floating wind started in Scotland.
So that's important news from Q4. Overall, we have, during '23, been focused on derisking that project as well. We have gathered data on the site. We've gathered wind data, soil data and also mid ocean data. All of that information and data has come in as expected. So we stand at the end of the year with a really good site with favorable [indiscernible] drivers. We have a location close to demand, favorable water depth and also good solar conditions.
So very much as we expected. And that, again, of course, gives us confidence in also submitting a consent application for that project during -- and that is probably when we look ahead, the major milestone for that project in '24 will be to submit a consent application for the project.
The project is continuing to being developed as an integrated team between Fred. Olsen Seawind and Vattenfall. And I think very positively, we see that we have managed to to really develop the project very quickly and really be on fast track both for consent, but also the later milestones for the project.
We will then take a step back and look at the big picture for offshore wind. We still see significant traction on the development of installed capacity. We have installed much more capacity over the last 5 years than what was originally expected. And we also see targets in line with net zero, which, of course, indicates a significant growth.
The flip side of that is, of course, we have seen short-term challenges in offshore wind, talked about before significant increase in interest rates, significant inflation and also isolated issues in the supply chain. But we still remain with a positive view on offshore wind long term. I think especially in Q4, we saw some news which were really positive in relation to offshore wind. I think especially in the U.K., they came out with announcement around ASX. As I alluded to before, they established a separate part of floating wind, but they also indicated a cap on price of GBP 176 in 2012 prices, which, of course, shows a commitment to supporting floating wind in its early days to develop into a competitive technology.
So that is one of the positive news. Second part is the year ended with record high FIDs for offshore wind projects, which also gives confidence in the future for the industry. I think for us as a developer, the challenges as we see now in supply chain, we see cancellations on other projects is something we take very seriously.
We currently are very focused on balancing the risk of our projects, being sure that we derisk the projects while not taking on more commitment than the derisking can justify. That also means that with that strategy, we are in a situation where our projects are -- have been derisked, but we haven't taken all commitments, which doesn't match the derisking.
So we -- with the portfolio of projects, we believe we are in an advantageous position with solid fundamentals in our project and also a good look ahead on derisking the projects further in '24. And with that, I will give the word back to you.
Very good, Lars. Alexandra Koefoed, CEO of Fred Olsen Carrier.
Yes. I'll go straight into it and present what will be for me the last quarterly presentation of Wind Carrier. So the quarter has been very similar to Q3. We have had Bold, Brave and Blue working on the same project. So Bold in Taiwan on the Chengfang project, Brave Tern in France, on the Sabre project; and Blue Tern in Scotland on the Neto project. So solid operations on all owned vessels.
And then, I guess, going to highlights of the quarter. Blue wind, the Sumit vessel performed her first project in the collaboration with Burwick. So we have the contract with the end client, but then Blue Wind Shimizu is a subcontractor to 4 week. So I think that's definitely 1 of the highlights in the quarter. And the other one, which is basically a little bit more symbolic, but it did create some engagement in the office between the other engineers and on the vessels. We passed our and turbine installed.
So solid operations and a high occupation that drives good results. So another strong quarter. It's not our best quarter, but it places itself in the top 3. But in terms of overall yearly result in 2023, that's a solid new all-time high for Fred. Olsen Wind Carrier. So we came in on an EBITDA of EUR 98 million. Last year, which was another solid record was EUR 77 million.
So solid operations on the 3 vessels and also adding Shimizu to the backlog, which gives an EBITDA contribution. Then I will move to backlog. So first, sort of what happened in Q4. We added a contract in 2027, the Baltica 2 contract with Ørsted, and we also filled a gap that we had a small gap in 2024. So that's finalizing the Greater Changhua contract or project for Ørsted. I think it's the third time we're back on that project and installing the last 4 turbines. So that's contributing to Q1 in 2024.
And of course, we have completed quite a bit of work. And then subsequent news since Q4 ended. So I'll touch upon that first brief turn into the yard in Navantia for her conversion upgrade like we did on Bold Tern 2 years ago. That means we'll be in the yard more or less for all of H1. So in relation to the backlog in 2024, we still think we have a strong backlog for 2024, given that one of our vessels is out for half of the year.
In addition to that, we have signed since end of Q4, so it's not included in the backlog columns that you see in the figure. That's end of Q4. So subsequent events, we have signed a reservation agreement for a contract of revenue around EUR 100 million. That contract will be executed mainly in 2025.
We will -- so it's a relatively long contract. We do expect that reservation agreement to turn into a firm contract by end of Q1. And then I would also just like to highlight that in 2025, we have a contract with significant subcontractor content. That's a contract we signed back in 2022. Just in terms of guiding for 2025, but still a very, very solid outlook for those wind carrier.
We have on sort of, at the end of Q4, EUR 535 million backlog and then the EUR 100 million that we expect to become a firm contract by the end of the quarter on top of that as well as the Blue Wind backlog of EUR 133 million. So all in all, that's EUR 766 million. And to put it into perspective, that's more than double what we had 2 years ago. So at least I feel I'm leaving the company in good shape. I've appreciated my 13 years in the Fred. Olsen Group. So I think this will be it for now.
Thank you, Alexandra. Next one is Fred. Olsen 1848 1848. We had Sofie Olsen presenting to you.
Thank you. Next slide. I will start off with Bonheur, where the main focus this quarter has been to finish off the basic design, where we are aiming to reach TRL 6 by the end of the quarter. And this will, of course, be a significant milestone for the technology.
For the floating maintenance solution, which is the maintenance solution where you can do on-site exchange of major components in floating wind. We are working together with Fred. Olsen Carrier. We have just finished a technical FEED study for the solution, and that lays the basis for the work going forward, which will be mainly commercially focused. And we're working together with customers to detail the business model.
Okay. For our floating solar developments, I thought I would start off by showing you a film. So if can we play, please?
[Presentation]
So you now saw our floating solar pilot being installed by our very hands-on team in research earlier last year. The pilot has provided us with very valuable insights in both procedures but also a lot on how it's operating all the components, et cetera, and we're incorporating this into future lessons learned.
So I also wanted to communicate that there has been a change in floating solar. All the floating solar activities are now gathered in under Fred. Olsen 1848. The focus here will be technology development. We believe that floating solar has a huge potential to be a part of the energy mix in several countries worldwide. And we will tackle this or attack this as a technology developed. Thank you.
Thank you, Sofie. And now we will talk about Cruise and Richard, please?
Yes. [indiscernible] not all for a detailed Cruise expert, but I'll do my best as usual. We had the 3 vessels, Boriales, Bolette and Balmoral operating in this quarter and we sold Bema and dwell a little bit like that because we -- Balmoral has been a very good ship for cruise lines over many years, and she was put in layup together with other ships during COVID. And we -- to be totally open about that. We have been in doubt what to do with Balmoral, but a while ago, we said that, okay, there are 2 new vessels, they are so well received in the market. And Balmoral a little bit of a different concept.
So we decided to put them out for sale. So we're very happy that we found a buyer that will convert her into retirement flats for U.S. retirees. And so she can have a future there, and we got a good gain on the sale, and we can now concentrate on Borealis, Bolette and Balmoral, which are all about the same size and number of passengers around 1,300 each, and we can have a more similar concept across the 3 ships.
So also on the performance, occupancy is up 71% to 64%. I think that is not unique to Cruise lines. We see cruise demand is back in the U.K. So most of the Cruise lines see higher occupancy. But we are also very proud of the service level we have been able to install at the ships. We had a good service level break of it, but also now coming out of COVID with very good customer feedback and that was illustrated by this FIFO Award, which is an award completely based on customer review, where the cruise lines came in at a very high level with 4.6 stars out of 5 stars achievable.
So a good service level. Maybe a little bit on the disappointing side is the ticket income of NOK 161 per diem. Still on the low side. It's much higher than pre-COVID. It's down from fourth quarter in '22, but that's mainly due to to a different mix of cruises with longer cruises compared to short decreases. So Cruise lines has job ahead to continue to drive occupancy and also see how they can deliver even more valuable product to the customers, so we can continue to get a higher price our services.
But all in all, resulted in a positive EBITDA of NOK 133 million. And also importantly, we continue to see good booking numbers. We are in the middle of the rainy season for the cruise industry, January and February. And and we see booking numbers coming in good. But again, that's nothing unique to Cruise lines. So by that, takes us will circle back to where the presentation started. I think we have commented on all the bullet points and all the numbers there, Anette. So I think -- that's also over to you again.
I'm sure there are some questions. So we will now open up for that.
[Operator Instructions] Your first question comes from the line of Daniel Haugland with ABG SG.
Congratulations on a solid set of results, especially given the tough price backdrop in the gas and power markets. And it's also very good to see the solid performance in Wind and Cruise. I have 3 questions, if that's okay. So the first one is on Renewable Energy. I guess you're aware of that there was a Bloomberg article some weeks ago, making some quite serious accusations regarding overstatements of curtailment compensation in the U.K. I don't think you have commented on this publicly. So maybe you could say something about your -- at least preliminary response to this. So that's the first one.
Absolutely. And a perfect question for you, Ivar.
Yes, we, of course, are aware of the article. I think I'll answer in just explaining the situation in U.K. The curtailment is part of the government's way to balance the the grid in the U.K. The -- and that the way it works is that if there is signs of over production, certain wind farms is being asked by National Grid to curtail, that is to holdback production. This is part of a procedure that has been established for years and it's a well-functioning and well-covered government system in the U.K. And as I said, we are part of it. It has 2 elements. It's the price per megawatt hour, which is offered by the various wind farms, and we believe we are within the expectancy level there. And then, of course, it is to be compensated for any loss of generation because you have been asked to curtail or to constrain your production by National Grid. And then that -- and how that is earned is that it's done forward modeling every half or an hour. And on that basis, the loss of generation is also as calculated and then you are compensated accordingly. And that is how the system works. And we are operating within that system and in close dialogue with National Grid on a regular basis. So I think that's the general comment I can make to this article. It's an article, and of course, we have read it, and we are very much aware of what has been documented there. And I think it points to the fact that curtailment is an increasing activity in the U.K. because of increased wind production. And hence, you also see higher curtailment numbers in the U.K. And as I said, we operate within the framework that is established.
Okay. Just maybe I have a short follow-up on that. So just so I'm sure I understand this forward modeling that is being done. Is that been done by every company participating, i.e., for example, you? Or is that some kind of model that's established by the regulator so you're basically just following that?
No, that is a requirement on each wind farm. And it's done routinely, as I said, every hour or half hour and it's 48 and 4 days ahead forecasts. And then generally, this is done by service providers, third-party providers who are then issuing this data continuously, 24 hours a day for the entire year. So that's -- it's part of the whole balancing mechanism in the U.K. and of course, for National Grid to be able to balance the network, they need to have forecasts to see will we have our production or the other in any area, and then they are doing the necessary balancing to maintain a stable network.
Okay. Then if I may, I also have one question on wind services. There has been some talk in the market about a potential cancellation of a contract in the U.S. Do you have any comments on that?
Alexandra?
Yes. It's well known in the market that have made some massive impairments, and those impairments are based on that they've ceased development of the Ocean Wind project. What I can confirm is that Bolette has not had any contracts canceled or terminated. And on a general basis, we have very good protection towards cancellation for convenience. No, I think that's what I'll say on that one.
Okay. And then my last one is on Cruise. So in the report, you say that the bookings for 2024 is good. Maybe would you be able to maybe say how they are versus the same time last year? Or maybe say if it's supportive of similar utilization levels that we have seen in 2023?
You want to comment on that?
Yes. No. Thank you for the question. We generally are quite careful of guiding. But when we say that booking numbers are good. We obviously into that lead that should be better than last year. But how much better, I think it's early days in the wave season, and we will not guide that precisely. But we would have not said if they were not stronger. Yes.
Yes. And explain the wave season is lane booking season.
Yes, that's the amount we are in now after Christmas when people are really in the buying mode for cruise. So a lot of things happened in the month of January, February and into March up to Easter. A lot of people are searching for cruise, booking cruises for this year, but also for '25.
Your next question comes from the line of Anders Rosenlund with SEB.
I have a couple of questions on Fred. Olsen Seawind. My first question is on Codling. You have the consent application this year. And previously, you've indicated that you aim for FID in 2025/2026. Does that still hold? Is that still your target?
Lars??
Yes, I think it's a good question, first of all, and thank that -- we have an aim to submit the consent application. We've been very focused on the derisking milestones, which were predictable around MAC, around grid, around CFD and other consent. I think the regime in Ireland is still new. So we have to be a bit careful on saying when we will get the consent determination, which is the response from the authorities. And that in the end, also leads the FID timing. So I'll be a bit careful telling you that it's going to be precisely that date. During '24, we will know more when we interact with the government on the precise timing of FID. But what I can say is that it's the last milestone we need in order to progress the project towards FID.
I think you had more questions for -- so you better.
Yes. Okay. So -- but -- but because you used this '25, '26 in the Q2 presentation. So I presume that was your best assessment in connection with Q2 and '25, '26 is still your best assessment. Is that fair to say?
I figure best assessment...
By later?
Yes. I think right now, and that was also part of my presentation. During Q3, we did see a lot of turbulence on the supply chain side in the market. We have now cutting looked at that turbulence in relation to commitments towards the supply chain. And it's clear right now, our strategy will be to derisk the project towards consent, but we will not pre-commit to the supply chain before we have a visible path on consent. And that might work case led to a small delay on but rather have security that we do not overcommit early and be sure we have a secure path to concern before we before we commit and then run the risk of basically later having to take impairments on the project. We don't want to run that risk. So yes, it -- I'm not going to guide more than that. We are focused on consent. We have a strong application. We have strong data supporting that. We have one of the projects with the lowest environmental footprint in Ireland. So we have strong belief that we will get a very robust consent, but we want a visible path to that before we start guiding on the delivery of the project.
I appreciate the answer. On Scotsman, I have a similar question. consent application 24. You previously indicated CFD auction in 2026. I don't know if that's the government has indicated that or whether that's your best assessment and then an FID in '27, '28. Does this time line still hold?
Yes. I think it's going to be a bit of a similar answer actually. I think what is it that's happened over the last half year to a year in the industry is that the interest rates have gone up, inflation has gone up, technology development on floating, investments into that have probably gone a bit down. So of course, as developer, we are we are carefully looking at when would the technology we've been mature in order to deliver the project. And we are currently looking very much into that. We have a project which is ahead of the queue on a lot of the other Scotland projects in relation to submitting a consent. So I think it's fair to say we are -- we have a competitive advantage when it comes to time. We are leading the pack together with others. But whether we will utilize that to a bit in early CFD or wait a bit, that's an important strategic question, which we, of course, have to discuss with our partner as well. And I cannot answer that today.
[indiscernible]
Yes. Just before I think you -- what you asked about, but maybe Lars, you should comment that the U.K. government already know gives CFDs on floating.
Yes, correct. That was what I also said in my presentation, which has been very important for us in order to have confidence in floating in Scotland is that there now is a separate floating part for the projects in floating, meaning that our project will only compete against other floating projects and not bottom fixed. Second point, which was very important in Q4 was that they announced a cap on floating of GBP 176 per megawatt hour in 2012 prices, which, of course, for us shows the U.K. government commitment to really supporting the floating industry in early phase in order to drive competitors competitive later on. But it's a relatively high price level with the cap.
Okay. And not surprisingly, I have the same question on Seresto. And aside from everything you've already commented on. What's the realistic FID here given the complete lack of credible progress from the authorities this far?
I'm going to be very honest, since we are not in the Silicon Norte competition. I do not together with the team spent too much time looking into Solicore 2 since we looked at it initially. So I -- what the time line is for that project now and how that looks economically and so forth, I wouldn't be able to tell you. I think it's probably more up to the ones that are prequalified and in that competition to give you an indication of that.
Your next question comes from the line of James Fleming with SP Global Markets.
I'm not sure if that's me, but can you hear me?
Yes.
Yes. Okay. Perfect. Perfect. Yes, good morning, everyone. So the first question is to Alexandra. So the reservation agreement for '25, is that a contract that can only be made -- a firm contract if so, wind contract is canceled?
As I said, we don't have any contracts in our backlog that are canceled or terminated and we expect this reservation agreement to turn into a firm contract. By the end of the quarter, a reservation agreement entails that the client has committed to us, and we have committed to the client. So no, it is not dependent on any other developments in the market that's entirely up to us and the client.
Okay. And when it comes to Ocean Wind, what's the status there because the project is canceled, but the contract is not canceled. Would that suggest that you will use will use the vessel backup capacity or reuse the vessel for a model project or something else?
I can't comment on that specifically, but -- and I think you need to turn to Ørsted in terms of what they're doing with the Ocean Wind project.
Okay. And could you give more visibility on the cancellation fees? Obviously, you say they are good, that's good there. But I mean, we don't know what you define as good. Could you give a more specific number or something else?
I think in terms of the IPO 2 years ago, we commented this. In a general basis, we make sure we have cancellation fees on contracts because when we commit a vessel to a client, we pull it from the market, which means we would let other possibilities go. And these cancellation fees, they start out at a level depending on how long before the project starts. And then they escalate up until projects start, contracts start and of course, the percentage reflects the possibility and ability to get out the work. So the closer you get to the project, the higher the fees are and they should make sure that for -- if clients cancel for convenience, not for cost. So at their discretion, 4weeks should not have significant are coming out of that.
Okay. And last question on the net finance for the quarter. So you had some unrealized losses on various things, including stack contracts. So my -- could you add some light into on that, is it unrealized losses related to U.S. group? Or is it minorities included? Or do you own those contract win 100% yourself? How should I think about it?
Yes, you should think about it that the main part of the unrealized losses this quarter and also the annualized accumulated gain on the interest rate swaps in the U.K. are shared with our partners in the U.K. So it's within the Renewable Energy segment, and it's within the joint ventures in the Renewable Energy segment.
Your next question comes from the line of Helene Brandbo with DNB.
Yes, I can start out with a question for Alexandra. I was just wondering if you could shed some more light on your new Vessel reservation agreement, for instance, in terms of geography, et cetera?
And no, I think this is an undisclosed contract. So what we said in the presentation -- or I don't think I mentioned it, but it says in the slide, it's for next generation turbines. And it's a significant duration covers most of '25. So I think you need to make your own conclusions out of that.
Yes. Okay. And I also have 1 question on the renewable energy side with respect to these regs and guarantees of origin I'm just wondering where you have seen these prices recently. If you could comment on that?
Ivar, do you want to take it or?
Yes. that I think that I wouldn't make any specific comments to the market levels on the geos and on the regas. I think that is that is available through to other sources. But what I can say is that there is an active geomarket in EU, and we are participating with in that market. And of course, then it possible also to sell geos going forward. Whereas in the U.K., we have the Regal market, and that is a market for production or generation that they've actually undertaken over these last 2 years. So I think that is the general comment I should make, and I shouldn't go into any specifics, I think, on the market conditions.
But maybe you could say that we have strengthened our commercial capabilities within the Renewable -- Fred. Olsen Renewables the last years, better of utilizing.
That is correct. Yes. We have -- this is -- but on a general note, the -- this is a market where we have seen both geo prices and the Regal prices increasing over this last years, particularly through 2021, '22 and now in 2023. And so we have responded to this. So we have specialist competence. Now internally, in terms of holding up on this market. And I think that's also partially what you see reflected in the numbers and the comments that Richard has made.
Your next question is a follow-up from Anders Rosenlund of SEB.
Yes. Since you didn't want to answer the [indiscernible] 2, just refresh the question and ask about the realistic FID year for [indiscernible].
Okay. Lars?
Thank you for the question. I think for right now, we don't even have visibility on the deadline for the application. Whether that will come during '24 is a good question. We definitely hope so. In our company, we have a strong team that has prepared a really solid application, but it remains to be seen. And since we don't have the deadline for the application, it's difficult to guide on when the project could be finished. Overall, it's definitely later than we perceived a year or 2 years ago. So I think you can add the delays that the government have the delays we've seen to the original time lines that we saw.
Your next question comes from the line of Sander Silber of Arctic Asset Management.
Yes. Very strong result congratulations. But in the renewables side, looking at production things very low even allowing for wind speed. So my first question is whether there is any compensation for curtailments in the numbers.
Yes. Of course, there is compensation for curtailment in these numbers as they are in every quarter, like EV said, it's a system in the U.K. where we pay for access 24/7 to the grid. And then the government needs to balance the grid and shuts down, so we cannot produce despite that the wind is blowing. Of course, we need a compensation for that. So there are pertinent compensation in this quarter.
But I think last quarter, you gave us a number that you were compensated for 60 gigawatt hours. So what's the number this quarter?
We haven't specified it this quarter, Sindre. But it's compensation every quarter, more or less.
Okay. So Yes, but it makes it very hard to model the results. My next question is Mercato. If my sense this correct, net debt in renewables is up more than NOK 500 million quarter-quarter is that purely due to dividend payment to the holding company?
Yes, that's the main effect that like we said on the third quarter result, given the strong results in renewable, they had accumulated quite a bit of cash, but that needs to be declared out of the joint venture on a 6-month basis after you complied with all the covenants reporting and so on to the banks. So that was done then in the second half last year and we dividend up NOK 650 million in the fourth quarter from Fred Olsen [indiscernible]. And of course, that reduces versus the net debt situation in Fred. Olsen Renewables with corresponding SEK 650 million.
Okay. Yes. Final, EGL reversed. I think you said SEK 56 million in the fourth quarter. What's the full year number?
We haven't reported that, but given the development in the energy prices, the number is not material for Bolar on a full year basis.
Okay. And then I'm looking -- there has been no change. So it's looking at let's say, assume that the forward power price curve is correct. There will be no material payments in 2024 either.
Yes, if they stay at this level, we will not hit any thresholds for EGL.
There are no further questions. I will turn it back to the speakers.
Okay. Thank you very much. This ends the presentation.