Full Year 2024 Ørsted AS Earnings Call

<unk> dot and humbled to step into this role after having been with the company for 13 years.

I would like to remind you that all participants will be in listen-only mode. The conference is being recorded,

Together with our skilled employees I and the rest of the group executive team will work relentlessly to create value for our customers shareholders and stakeholders at large.

the presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone for operator. Assistance, please press star and zero. The conference was not be recorded for publication or for broadcast. Today's speaker, our group president and CEO razmos above and CFO. Sean Wesley Gentlemen, please begin.

<unk> has a strong foundation with unique capabilities and I'm looking forward to taking the lead on the transformation necessary to navigate the headwinds that us and our industry currently faces.

While I'm only a few days into the role I know Arista and the challenges we face a very well.

Hello everyone. Uh, and thank you for joining today's uh, presentation.

And I am convinced that the measures we are introducing today are needed in particular with respect to the lowering of our projected investments towards 2030.

This is my first earnings call as CEO of us and I'm honored and humbled to step into this role after having been with the company for 13 years.

By approximately 25% on a like for like basis through a more disciplined approach to capital allocation.

Also we will continue to be active across our three regions and our number one priority will be to deliver on our committed construction program.

That being said when we pursue new development opportunities across offshore wind onshore wind solar PV.

Battery energy storage and also carbon capture we will first and foremost prioritize the most financially attractive offshore wind opportunities in regions and countries, where we see the most attractive framework conditions and investment environment.

And where we had the most distinct competitive differentiation and ability to leverage and unfold our business model across the full life cycle.

As it has been the case in the past offshore wind is where we have our unique and most distinct capabilities and our capital allocation going forward will continue to reflect this.

Further our reduced growth ambitions towards 2030 will inevitably lead to us becoming a more focused company.

We are currently constructing more than eight gigawatt of offshore wind.

But with an expectation to see a lower construction of gigawatts per year towards the back end of 2013, we will in the coming years be right sizing our organization to fit our future needs.

At the same time, we expect to see growth in particular in our generation and trading in revenue business as further offshore wind farms will be commissioned in the years to come adding to our existing operating fleet of 10 gigawatt offshore wind.

At the same time I want to reiterate that despite the reason and highly disappointing challenges related to our U S offshore wind projects under construction and the adverse impact it has had on our capital structure we have.

Remain fully committed to our target of having a solid investment grade credit rating.

With that said.

Let me start with the performance highlights and strategic milestones achieved during 2024.

For the full year 'twenty four we achieved an EBITDA.

Of $24 8 billion DKK.

In line with our guidance of 24 to 26 billion.

Adjusted for cancellation fees and new partnerships. This represents an increase of $700 million compared to last year, and an earnings mix, where our offshore and onshore assets were significant contributors highlighting again the strong operational platform we have.

During 2024, we also managed to sell a large number of contracts related to ocean wind, one and flagship one.

Some of these settlements were finalized at better than assumed terms, leading to a total net reversal of cancellation fees of $7 3 billion.

At this point, we have less than 2 billion remaining in the provision meaning that we have nearly worked our way through all the contracts related to the projects had significantly better outcomes than we had expected.

The total group EBITDA for 2024, including the new partnerships and these cancellation fees was 32 billion, which was one of the highest EBITDA levels in the history of the company.

As part of 2024 accounts, we have record total impairments of $15 6 billion for the year with the majority relating to the adverse development within our U S offshore wind portfolio.

While a portion of the impairments are driven by the increase in the long dated U S interest rates as well as prevailing market uncertainties outside of our control. We are very disappointed with the execution challenges and will ensure an increasingly sharp focus going forward on delivering these projects. According to the updated schedules and budgets.

We will also work towards being more granular in our communication around the progress and the risk in our offshore construction projects.

For the full year adjusted for impairment losses, and cancellation fees, we delivered a return on our capital employed of 10, 1%.

Which is slightly below our average roshi top towards 2030.

And we will come back to this number later in the presentation.

Lastly, our continued and relentless focus on safety continuing to pay off as we have reduced our total recordable injury rate in 2024.

It is the second year in a row that we experience a reduction and we see that as a result of our long term focused effort.

We are very pleased with this development, we will never rest when it comes to safety and we will go to work every day with an aspiration to bring it down even further.

Turning from the performance highlights towards our strategic milestones, where I'm pleased to say, we made significant progress through the year.

First we have commissioned around two four gigawatts of total renewable capacity across offshore and onshore assets representing.

A significant contribution to the build out of our operational fleet of assets.

In addition.

We very recently took the final investment decision on our Baltic two project in Poland.

All major components and vessel contracts for the projects have been signed.

In the majority of the projects Capex with significantly Derisk the project.

We are satisfied with the value creation of the project, which has which has an attractive risk reward profile.

This highlights that solid investment opportunities continue to exist. Despite the challenging industry backdrop, and I am proud of the team getting the project to this important milestone.

Another key milestone for 2024 was the award of three five gigawatt of offshore wind in the U K allocation round six.

With an inflation linked offtake for one one gigawatt shell to Hornsea three project and 2.4 gigawatt for the Hornsea four project.

We are very satisfied with the outcome of the auction in one of our core markets and we acknowledge that the UK government.

As shown resolve in adapting its support schemes for offshore wind to reflect current market conditions.

In addition to the U K, we find the recent regulatory development for offshore wind in Poland, and Denmark encouraging.

Within our divestment program, we achieved significant progress during 2024 and delivered in line with our expectation.

During Twentyfold, we secured proceeds of around 22 billion across five divestments.

This demonstrates our ability to take projects to the market and we continue to see an interest for our broad asset portfolio.

Despite the challenging market conditions, we are on track to deliver on our on our divestment program towards 26, which Todd will talk more about later in the presentation.

During the year, we also shut down our last coal fueled combined heat and power plant the Esbjerg power station in Denmark.

This marks the end of a chapter in our Green transformation and is the last major step in our journey to meet our industry, leading science based targets of reducing our scope, one and two emissions intensity by 98% by 'twenty five.

Going forward, our entire energy generation will essentially be fossil free.

On innovation, we introduced new groundbreaking technology as part of the installation of <unk>, two and three and we have successfully developed and used a first of its first of its kind noiseless monoplane installation technique, which enables a further reduction of the potential impact from construction activities.

On the marine environment as well as constructing in a more cost effective way once we have adopted this at scale.

Let's turn to slide five where I will walk you through the adjustments to our business plan.

While we did achieve significant strategic steps. During 2024, we also saw adverse developments and continued challenging market conditions.

While the majority of these industry related challenges were reflected in the updated business plan, we presented a year ago.

We have seen further challenges materializing, which have put our capital structure under pressure.

So in addition to the number of ongoing activities. We have talked about before we are now taking further measures to improve our value creation and competitiveness as well as ensuring that we have a self funded plan that can improve our capture structure in the medium to long term.

These measures are all within our our control and they will contribute to our business being more efficient more focused and more simple going forward.

As I mentioned, we will first and foremost prioritize offshore wind opportunities in the markets with the most attractive investment environment, and where we can leverage our distinct capabilities.

This focus will lead us to pursue and invest into few opportunities than we had previously anticipated and combined with our dedicated focus on executing the current construction portfolio and our 2026 targets, we have chosen to step away from our previous 2030 gigawatt ambition.

That being said.

I want to make it absolutely clear that we still fundamentally believe in the long term attractiveness of offshore wind and renewables more broadly.

As an extension of the lower expected build out and following the adverse developments that have impacted our capital structure, we will reduce our investment program to 2030 with around 25% compared to our previous ambition.

This decision is in line with our commitment to ensure a strong capital structure that can support a solid investment grade rating.

We want to be a focused and efficient business and therefore, we are introducing additional measures to achieve this.

We are delivering on the cost savings plan launched a year ago, which will bring permanent cost savings of 1 billion per year as part of organizational efficiency initiatives and we will take further measures to go beyond this.

We will not be expanding in constructing at a pace similar to our current build out program and we will as a natural consequence be continuously right sizing our cost and organization in the years to come to fit our value and capacity and patient.

The final part of this is a very clear prioritization of value over volume, including a more focused capital allocation.

On the back of the challenged renewable industry and the adverse developments experienced in recent years.

We will employ an even more focused approach to our capital allocation.

And we do see that we have plenty of opportunities in our core markets to leverage our core capabilities.

With the opportunity set that we have we will only select them progress investments within the most attractive market opportunities and continuously assess which markets. We should continue to prioritize.

Turning to slide six and our investment program.

Yeah.

In February last year, we provided guidance on our long term investment program, where we expected to invest around 270 billion towards 2030.

When we take an adjusted view on this number today, reflecting the same group of projects, we see that the Capex program would have increased by around 10% on a like for like basis.

This is primarily based on both cost increases for the offshore projects under construction as well as cost increases in the projects in our pipeline, which we have not yet committed to.

As a result of the adverse developments in 2024, we have decided to prioritize our investments and reduce our total gross investment by approximately 20% to 25% on a like for like basis towards 2030.

Which means we expect to invest in the range of 210 to 230 billion towards 2030.

This range can be character cattle garage into three components.

First we invested around 43 billion last year into our construction portfolio.

Second the incremental investment level into our nine gigawatt construction portfolio is planned to be around 130 billion and will take place towards the back end of 2027.

When we look beyond our construction portfolio and the committed Capex, we have an investment capacity of around 40 to 60 billion.

The allocation of this capital will be prioritized to the most value accretive opportunities going forward, while ensuring a continued stable capital structure.

I will now turn to slide 10, and our current build out plan.

As of today, we have 18.2 gigawatts of installed renewable capacity more than half of which is within our offshore business.

We currently have nine two gigawatt of renewable capacity under construction.

Of which $8 four gigawatt is offshore capacity.

The capacity under construction will come online throughout the next three years and once fully commissioned by 2027.

Install capacity of our portfolio will increase by around 50% in total and almost doubled for offshore wind.

It will not be easy and further challenges will arise.

Delivering on this plan in the coming years will make us entered the backend of this decade from a position of strength and will solidify our position as the undisputed global leader in offshore wind.

We have a high degree of Capex visibility for the projects under construction.

And we expect to hold investments of around 30 billion from now on and onwards to complete installation of the construction portfolio.

It is important to highlight that we do have a meaningful investment capacity to support further growth beyond this build out.

However, I will reiterate and emphasize that it is surely the value creation and capital structure that will drive our future capital allocation decisions.

Within the strategic parameters that we have said we have named a few of our near term opportunities, including <unk>, four where we have secured offtake, but not yet taken a final investment decision.

And as we ensure to limit capital commitments in the early stage of project development, we can prioritize or deselect based on risk reward of the projects.

We do have a broad opportunity set of development projects, both near and long term and we will only progress the opportunities that are aligned with our capital allocation principles.

Despite stepping away from our 2030 ambition. It is important to highlight the broad set of opportunities that we have available.

We have numerous options ranging from centralized and decentralized tenders cheap it licenses as well as greenfield opportunities across our three regions and this showcases that the long term outlook for the renewable industry in Australia remains attractive.

Let's turn to slide eight and our earnings outlook and return on capital employed.

When looking at our earnings growth in the coming years, we expect to deliver significant growth.

By 'twenty six we expect to reach an EBITDA level in the range of 29% to 33 billion, which imply a CAGR of 12%.

The earnings increase towards twenty-five will predominantly be driven by ramp up generation within our offshore business Todd will cover this in further details in a minute.

Todd: Looking at the earnings increase from 25% to 26. This consists of two main categories with the first one being ramp up generation from our offshore and onshore assets, including full year contribution from Ash, it's being commissioned during 2025.

Todd: And secondly, we expect to see higher earnings from our existing partnerships agreements due to timing of transactions. This.

Todd: The second component is obviously associated with some uncertainty.

As you May notice the EBITDA guidance range for 2026 has been slightly lowered as a result of the delayed installation and those ramp up generation from our revolution and Sunrise wind projects.

When we turn to our roshi for the period. After 2030, we continue to see it at an attractive level.

Todd: When comparing to the outlook that we saw one year ago, our Osha will improve as a result of the lower investment program.

Todd: However, this is offset by the higher cost and schedule delays that we've seen to our U S. Construction projects as well as higher cost for our pipeline projects.

Todd: The totality of these developments led us to revise our oce for the period to around 13%.

Todd: We continue to guide on this metric towards 2030 at different scenarios and opportunities that we internally are assessing and working with them.

Todd: On this longer term horizon, all will yield a similar level of roshi over the period.

Todd: Let's now turn to slide nine where I will give a status on our construction projects.

Todd: Our German program, our Goldman three project is pugin at full capacity.

Todd: The final part testing is expected to be completed within the coming two months.

Todd: Balkan with Con three all foundations and turbines have been installed and are mitigating actions have successfully manage the installation of the project. According to the schedule.

Todd: As mentioned at our Q3 earnings call. The German transmission system, operator has seen a delay to the grid connection and therefore first power is not expected until end of this year.

Todd: The delay of the grid connection will be compensated according to market regulation and is reflected in our EBITDA guidance for 2025.

Todd: In Taiwan, we continue to progress the construction of our greater China to be in full with the expected completion of the offshore substation jacket and topside during the call.

Todd: The fabrication of foundations and cables continue to progress as planned and turbine Foundation installation is expected to start in the first half of 2025, and we expect to see first power over the Soma.

Todd: Commissioning of the project is currently expected at the very back end of 'twenty, five or the risk of it becoming early 'twenty six.

Todd: For Revolution wind construction remains well underway. We have currently 52 mono piles installed 18 turbines installed and the vast majority of the export cable in place.

Todd: Nearly all remaining components, including mono piles in array cables are fabricated.

Todd: We have a strong visibility on the fabrication and installation of remaining components, including the offshore substation mono pilot, where we have secured a viable path forward for the installation.

Todd: The onshore substation work continues to progress according to our updated plan.

Todd: We have a suitable level of contingency in the project, reflecting the remaining risks and we are delivering according to the updated schedule.

Todd: We expect to complete offshore construction work later in 2025.

Speaker Change: And Connie and commission the project in the backend of 2026.

Speaker Change: For Sunrise wind, we continue to have progressed construction as we shared.

Speaker Change: A few weeks ago. The project has seen adverse development in terms of higher cost and schedule delays, which have been factored into the business case now.

Speaker Change: While we work extremely dedicated to deliver on the updated schedule and time line. We have seen good progress in terms of onshore construction work as well as fabrication of the offshore components, such as monoprice turbines and export cable.

Speaker Change: We expect to commence the offshore construction work during the first quarter of this year.

Speaker Change: Regarding the U S. We have closely followed the recent political and policy developments and we are currently reviewing the executive order on when the entity that was issued on January 20.

Speaker Change: Appointees are being confirmed as we speak and are stepping into their positions and these officials will interpret and implement these policies. We will continue to update our assessment throughout this process.

Speaker Change: For the Hornsea three project construction continues to progress as planned both with the onshore scope as well as the offshore activities, which will commence later this year.

Speaker Change: The offshore works will relate to preconstruction activities, such as polar clearance and rock dumping.

Speaker Change: Also the construction work for the co located battery storage solution is planned to start during the second quarter of this year.

Speaker Change: We currently expect to commission the project at the back end of 2027.

Speaker Change: Lastly, we have taken the final investment decision on our Baltic two project.

Speaker Change: <unk> holds a 25 year inflation index Cfd contract.

And have secured all major components and vessel contracts for the project logging in the majority of the Capex.

Speaker Change: We are satisfied with the value creation of the project, which has an attractive risk reward profile and we expect to commission the project in late 2027.

Speaker Change: In onshore the construction of our European and U S portfolio continued to progress well.

Speaker Change: With construction work ongoing in the U S, Germany and Ireland.

Speaker Change: Let me finish my part of the presentation with slide 10, summarizing our value creation.

Speaker Change: Even though we will be reducing our investment program, we do have investment capacity to pursue the most attractive projects.

Speaker Change: The growth opportunities we have in our portfolio. In addition to our current on our construction portfolio.

Speaker Change: Our targeted value creation remains in place with respect to where target of 150 to 300 basis points.

Speaker Change: We remain firmly convinced that our business will continue to deliver value through a solid and attractive platform.

Speaker Change: Our operational renewable assets continued to deliver strong cash flows based on a high degree of contracted and regulated revenue.

Speaker Change: And as I have highlighted on the previous slides, we have a high degree of visibility on the near term.

Speaker Change: In the near to medium term capacity expansion and EBITDA growth through our construction portfolio of renewable assets.

Speaker Change: The combination of earnings from our operational assets, our construction portfolio as well as the return requirement for future investment capacity, we continue to enjoy attractive returns on our investments with our rotary <unk> of around 30%.

Speaker Change: With this let me handle what you'd want in a walk through of our finances.

Speaker Change: Thank you, Chris and good afternoon, everyone.

Speaker Change: First let me start with slide 12, and the EBITDA for the year 2024.

Speaker Change: For the presentation all numbers are quoted in Danish kroner.

Speaker Change: In 'twenty four we realized a total underlying EBITDA of $24 8 billion.

Speaker Change: Total EBITDA, including new partnerships and cancellation fees is 32 billion one of the highest EBITDA levels in the history.

Speaker Change: The operational earnings have been solid and consistent throughout each quarter each of the quarters.

Speaker Change: <unk> delivered in line with our expectations.

Speaker Change: Let me walk you through the main earnings development for the year.

For our offshore business. The overall earnings came in around the same level as last year.

Speaker Change: The earnings from sites increased significantly driven by ramp up generation higher wind speeds for the year and higher prices on green certificates and inflation indexed hazards.

Speaker Change: Also the sites sites performed was positively impacted by around 900 million as a result of change in our cost allocation mythology.

Speaker Change: Which does not affect the overall earnings profile.

Speaker Change: Earnings from our existing partnership decreased compared to last year, and where many really.

Speaker Change: Weighted to updated assumptions and increased provisions.

Speaker Change: In the operation and maintenance contracts of the U K offshore transmission assets.

Speaker Change: The losses reflect a net present value over the remaining lifetime of the project and not driven by expectedly higher cost relating to assumptions on transmission charges and servicing of the offshore substations.

Speaker Change: Despite not owning these assets we have assumed the operations of them to ensure that we can maximize the generation output of the wind farms and ensure any potential downtime in the export cables are identified and fixed as quickly as possible.

Speaker Change: Also we have seen higher cost for Vulcan Rifkin.

Speaker Change: Which have led to reduced earnings under the construction agreement.

Speaker Change: Lastly, there is an increase of other bucket, primarily driven by the cost.

Speaker Change: Reallocation of overhead that I mentioned.

Speaker Change: Before of about $900 million.

Speaker Change: For onshore earnings increased by 1 billion in line with expectation, primarily due to ramp up generation from new assets that have been commission during 'twenty four.

Speaker Change: Within by energy and other.

Speaker Change: Earnings from our combined heat and power plants were around the same level as last year, whereas earnings from our gas business decreased.

Speaker Change: As a temporary positive effect from revaluation of our gas at storage recognized in 2023 was not repeated to the same extent this year.

Speaker Change: Finally, we have continued to work through the contracts relating to your ocean wind one and for the full year, we have reversed cancellation fees of $7 3 billion due to better than assumed outcomes of the contract settlements.

Speaker Change: Turning to slide 13, and our financial guidance for 25.

Speaker Change: For the full year of 25, we expect an EBITDA in the range of 25 to 28 billion.

Speaker Change: Let me go through the expected drivers for the different segments.

Speaker Change: In our offshore business overall earnings are expected to be hiring 25 for the sites. Our earnings performance is expected to increase driven by a ramp up generation of a number of projects as well as compensation for the grid delay working rifkin tree in.

Speaker Change: Germany.

Similarly, we expect to see higher availability rates in 25 compared to 24, leading to an increase in earnings.

Speaker Change: We also expect earnings increase from inflation things, our ocs and CFT forums.

Speaker Change: Partly offset by lower off take price assumptions for our merchant assets as well as lower earnings at Anhalt The Ole.

Speaker Change: German assets.

Speaker Change: They respectively see a phase out in a step down in the subsidy level.

Speaker Change: Yeah.

Speaker Change: Also we expect to incur ramp up costs relating to revolution wind and Sunrise win as they are preparing for operations, but.

Speaker Change: But we do not expect any ramp up generation.

Speaker Change: Earnings from our existing partnership.

Speaker Change: Is expected to increase as we do not anticipate the negative effects in 'twenty four.

Speaker Change: To be repeated in 'twenty five.

Speaker Change: For our offshore business, we anticipate and a higher share of project development cost to be expensed, and likewise higher fixed cost.

Speaker Change: For our offshore onshore business.

Speaker Change: We expect an increase in the earnings performance.

Speaker Change: This is driven by the ramp up of ramp up capacity as well as expectedly higher availability rates.

These elements are partly offset by the impact of the lower generation capacity following the divestment of our portfolio of projects to ECP.

Speaker Change: For our bio energy segment, we expect earnings from our combined heat and power plants to be in line with the same level as last year.

Speaker Change: For our gas business, we expect earnings to increase driven by the higher gas volumes that will be available following the full reopening of the tier of yield.

Finally, we expect gross in with restaurants in the range of 50 to 54 billion.

Speaker Change: Driven by investments into our offshore and onshore construction activities.

Speaker Change: Our gross investments guidance is particularly sensitive to our divestment program.

Speaker Change: And may be impacted by changes in timing of transactions.

Speaker Change: Let's turn to slide 14, and our sources and uses.

Speaker Change: When we look at our funding composition towards 2030, the reduction in our future expected build out as well as our investment program and sure.

Speaker Change: We continue to have a fully self funded plan.

Speaker Change: To fund our investment program of two.

Speaker Change: 210 to 230 billion.

Speaker Change: The largest contributor who remains anchored in strong and stable cash flow generation from our operational portfolio.

Speaker Change: Contributing to more than half are our funding needs.

Speaker Change: Funding from partnership and divestment program will make up around 30%.

Speaker Change: Reflecting a sizable share as well.

Speaker Change: It is planned to be more front end loaded.

Speaker Change: As is an element of our funding program that we consistently have shown over the years that we can deliver.

Speaker Change: Also with our 'twenty 'twenty four divestments in mind.

Speaker Change: The final two components are our tax equity funding as well as the depth and hybrids.

Speaker Change: When we look at our tax equity funding. The majority of this is expected to come from a revolution in Sunrise wind projects.

Speaker Change: The net issuance of debt hybrid will also remain limited as.

Speaker Change: We progress over the coming years.

Speaker Change: On the user side, we have strong visibility on the gross investments as we are constructing and advancing renewable portfolio overall more than nine gigawatts.

Speaker Change: In addition to this we have some hybrid coupons as well as minority dividends payments that we are planning to undertake.

With the measures we have taken to ensure focus on improvement of our credit metrics, we have headroom in our funding plan to strengthen our capital structure.

Speaker Change: So let's go to slide 15, and our divestment program.

Speaker Change: Yeah.

Speaker Change: During 'twenty four we have delivered proceeds of around 22 billion, which was in line with our expectations.

Speaker Change: And puts us on track to deliver on our target all proceeds of $70 billion to $80 billion for the period of 'twenty 'twenty four to 'twenty 'twenty six.

Speaker Change: As we said one year ago, we have a number of transactions in the market and the transactions announced during 'twenty four is the testament to this.

Speaker Change: We continue to have a broad set of opportunities that we can bring to the market and ultimately progress where the transactions that are the most attractive to us.

Speaker Change: When evaluating the attractiveness of the transaction we do so.

Speaker Change: Excuse me.

Speaker Change: Such based on three non prioritized criteria, which are value creation capital recycling as well as risk diversification.

Speaker Change: With the conditions for divestments are different compared to years ago, we do see benefits from our experience within the farm down market that we have accumulated through frequent engagement for more than two decades and.

Speaker Change: And we'll continue to see a sufficient appetite in the market, particularly for high quality assets.

Speaker Change: Over the coming two years, we anticipate to deliver the remainder of our targeted proceeds.

Speaker Change: While we continue to assume a relative.

Speaker Change: Well balanced split of proceeds across the three years.

Speaker Change: It will ultimately come down to the timing of transaction.

Speaker Change: Which can shift the distribution of the previous proceeds between the calendar years.

Speaker Change: Let's turn to slide 16, and our capital structure.

Speaker Change: Throughout 'twenty four we have taken a number of steps to support the trajectory of strengthening our capital structure and ensuring a solid investment grade rating.

Speaker Change: First we managed to settle contracts related to ocean wind one better than assumed terms such that we can such that we have preserved more than $7 billion in 'twenty four.

Speaker Change: Which would have had an S F O as well as net debt impact.

Speaker Change: We have also introduced a reduction in our development expenses.

Speaker Change: Through market prioritization, which will lead to a reduction of 3 billion towards 'twenty 'twenty six.

Speaker Change: And we continue to progress this number.

Speaker Change: Furthermore, we have succeeded in reducing our cost base on a like for like basis by 1 billion through simplification and efficiency increases.

Speaker Change: Finally, we have so far delivered on our targets for our divestment program.

Speaker Change: Where we have secured proceeds of 22 billion during 'twenty four and remain on track to secure in the range of $50 billion to $60 billion over the coming two years.

Speaker Change: However.

Speaker Change: Following the recent adverse developments in our U S offshore portfolio, we have seen further pressure to our credit metric in the short term.

Speaker Change: In addition to progressing what we already have initiated we are taking further measures to strengthen our balance sheet.

Speaker Change: In short this includes a reduction in our investment program and introducing.

Speaker Change: The additional cost efficiency measures.

Speaker Change: Turning to our credit metrics, we ended the year at 13%. This is better than we assumed a year ago given that we have reached settlement on our contracts relating to ocean wind one at better than assumed terms.

Speaker Change: During 'twenty four we have paid off $6 3 billion of cancellation fees.

Speaker Change: And if you remove the impact of these.

Speaker Change: This.

Speaker Change: [noise] hand to our credit metrics for the year.

Speaker Change: The number would have been around 22%.

Speaker Change: Looking at our short term credit metric projections, we do see that the recent adverse development within our U S offshore portfolio impact impact put pressure on our credit metric in the short term.

Speaker Change: As such the improvement of our credit metrics will be slower than we previously assumed.

Speaker Change: We still remain on track to deliver on the trajectory towards the vote to net debt all of 30%.

Speaker Change: Yeah.

Speaker Change: We have taken note of recent rating agency decisions following our impairment announcement earlier in January.

Speaker Change: Our swift reaction to mitigate the pressure on our balance sheet and the additional levers. We have available is how are we seeing over a clear here that we are serious about our rating of amendments and that.

Speaker Change: Trajectory of improving our capital structure.

Speaker Change: Even as it requires a moralist compared to our expectations a year ago.

Speaker Change: So we're not.

Speaker Change: Let's go to the Q&A session.

Speaker Change: Yeah.

Speaker Change: Ladies and gentlemen, this concludes the presentation and we'll now open up for questions. The skull after that no later than five or 15 30 with respect only one question per participant and then go back to the queue for a second question.

Speaker Change: One who wishes to ask a question.

Speaker Change: Star followed by one on that California, you'll hear attempt to confirm that you have entered the queue.

John: Yes, John we're moving stuff from the Q1 press Star two.

Speaker Change: Question is on the phone are requested for disabled allows multiple often question anyone wants a question press star one at this time.

Speaker Change: The first question comes from the line of Harry <unk> from BNP Paribas. Please go ahead.

Speaker Change: Hi, Thank you very much.

Speaker Change: Hey, congratulations.

Speaker Change: Yes.

Speaker Change: And I'll say it.

Speaker Change: Oh gosh, how much since Allen thank you.

Speaker Change: Yeah.

Speaker Change: Hum.

Speaker Change: Ill take the question with a very high level one.

Speaker Change: And do you think that is.

Speaker Change: And that will tell you that that case is there enough of a buffer here.

Speaker Change: Anything else goes wrong side lots of by my thought is in the U S et.

Speaker Change: Et cetera.

Speaker Change: And then secondly.

Speaker Change: Is that enough of a great proposition given that use its continued your 'twenty two target.

Speaker Change: Would you consider coming back again to some or all of the auction with the well that I got to say M D.

Speaker Change: So new investment plan and given that presumably you didn't have a huge amount of time.

Speaker Change: At the same time together since that.

Speaker Change: Right down to a few weeks ago. Thank you.

Speaker Change: Thank you Harry and thank you very much.

Speaker Change: So show what you two parts to your question of is there enough buffer in the plane and all and secondly is there enough growth in the claim.

Speaker Change: And so so ASP ASP.

Speaker Change: We are today presenting a fully self funded plan.

Speaker Change: And we do believe that it is indeed, a sufficiently robust.

Speaker Change: And there is no doubt.

Speaker Change: Got it.

Speaker Change: We have seen increased pressure.

Speaker Change: On our metrics and obviously.

Speaker Change: In particular due to the recent events in the U S.

Speaker Change: First one on the Revolution wind and then Sunrise as we communicated in Q3, and then a couple of weeks ago.

And we have we have been through both projects are quite quite diligently obviously, we have rebased. The schedule, we have rebased the capex.

Speaker Change: And.

Speaker Change: And what we know today, we are we have a good.

Speaker Change: Feeling about those projects.

Speaker Change: Overall.

Speaker Change: Obviously.

Speaker Change: When you are constructing a construction program of 8.4 gigawatts of offshore wind.

Speaker Change: Cannot sit here today and say that there are no risks associated with that of course there are.

Speaker Change: Or what I can tell you here is that that would be our number one priority to deliver on that construction program in the next three years and everything we do.

Speaker Change: And by doing so we also believe that we today presenting a proposal.

Speaker Change: As for the growth part of your of your question.

Speaker Change: You are right that that we have we have downloads adjusted.

Speaker Change: Our our.

Speaker Change: Capex at projections towards 2030 today.

Speaker Change: But bear in mind.

Speaker Change: A couple of things first of all.

Speaker Change: By delivering on our construction program now, especially on the offshore side, we will be almost doubling our offshore capacity towards the back end of 2027.

Speaker Change: That is to me a very meaningful growth.

Speaker Change: And it is something that will in our view absolutely solidify our position as the undisputed global leader in offshore wind.

Speaker Change: And then as for additional opportunities in our portfolio, which we have also have communicated today. We have we have 40 to 60 billion.

Speaker Change: U K K of uncommitted capital.

Speaker Change: Available towards 2030.

Speaker Change: And we do believe that there is a.

Speaker Change: To answer a very meaningful amount.

Speaker Change: And something we will now.

Speaker Change: Sort of youth in the absolute best investment propositions that lands on our table and be very financially disciplined in the way, we decided to allocate that capital.

Speaker Change: Okay. Thank you very much.

Speaker Change: The next question comes from the line of Christian Toro from Seb. Please go ahead.

Speaker Change: Yeah. Thank you so somewhat similar question so.

Speaker Change: The $20 billion range Youre, indicating for your investment program.

Speaker Change: Sure tend to transparency.

Speaker Change: Should that be viewed as extra buffer yeah. So I mean say the the corona status.

Speaker Change: According to independent notice a bit more than 5 billion then it sort of takes 5 billion away from the spread.

Speaker Change: Right of way to think about.

Speaker Change: Yeah.

Speaker Change: Hi Christian.

Speaker Change: I don't I don't think about it like that.

Speaker Change: I don't think about it like that when you were.

Speaker Change: I think what you need to to take away from from the numbers.

Speaker Change: Is the fact that there that out of the two change of 230 130 of them are committed.

Speaker Change: And then 43 billion spent.

Speaker Change: In 'twenty four and then there is.

Speaker Change: Something left wishes to 40 to 60 and that is where where we are where we are where we see the see the range in our view. So so that is the way to think about it in and then the and then specifically on your point on the energy communities 10.

Speaker Change: A 10% debt that we have.

Speaker Change: No.

Speaker Change: We have based our our investment decisions on all good valid treasury guidance.

Speaker Change: And we do find it unlikely that changes with with retrospective effect there will be a will be entered into with respect to our.

Speaker Change: The energy community is 10%.

Speaker Change: You'd really need to differentiate between.

Speaker Change: The ethics.

Speaker Change: Assets under construction and then a.

Speaker Change: Development.

Speaker Change: In Oregon.

Speaker Change: Like we've done before we have been very explicit.

Speaker Change: In our annual accounting and oats on exactly what would the implications be of us not having those.

Speaker Change: 10% energy communities and there is the $5 3 billion.

Speaker Change: Yeah.

Speaker Change: Understood I guess I could have asked I mean.

Speaker Change: Would you be able to go higher than June 30.

Speaker Change: Or if anything happens for whatever reasons would you have to sort of offset it.

Speaker Change: For the remainder.

Speaker Change: No higher than the 230.

Speaker Change: We believe that an investment plan towards 2030 between two to 10 to 30 is the right number for US we believe that is a robust plan.

Speaker Change: And we believe that there is there is.

Speaker Change: No.

Speaker Change: Right painful.

Speaker Change: Thank you.

Peter: The next question comes from the line of Peter <unk> from Bank of America. Please go ahead.

Speaker Change: Yeah, Hi, Thank you for taking my question.

Speaker Change: Talk a lot about cost pressures have caused your credit metrics to deteriorate.

Speaker Change: Obviously, we're aware of the $4 billion cost type of Iran. Sunrise wind.

Speaker Change: But the Capex inflation that you presented.

Speaker Change: Today, it's actually 30 billion.

Speaker Change: But that's it.

Speaker Change: Approximately 270 billion Capex.

Speaker Change: Capex plan that you've had until now.

Speaker Change: So you're just trying to square worthy of a 25 billion is coming from and why that wasn't that's closed.

Speaker Change: Before Tonight, because Q3 slides still shows up to 70 billion.

Speaker Change: And also in terms of your credit metric deterioration how much of that also comes from Opex.

Speaker Change: Costs being higher than anticipated.

Speaker Change: I suggest that I take the first part on the cost pressures and then leave it for you.

Speaker Change: On the Opex on the credit metrics.

Speaker Change: And so sharply so Peter your question on sort of where where does the 30 billion of additional cross investment come from us of course.

Speaker Change: I fully understand.

Speaker Change: The way to think about it is that.

Speaker Change: On a.

Speaker Change: On a like for like basis since the.

Jim: So Jim you update we did in February.

Speaker Change: We have seen.

Speaker Change: The capex increases from our U S projects.

Speaker Change: Roughly roughly half of that amount.

Speaker Change: And a little bit more.

Speaker Change: The remainder of the $30 billion.

Speaker Change: The vast majority of the remainder up to $30 billion is capex related too.

Speaker Change: <unk> uncommitted projects at a time, so that is our expectations of the projects that we have in our portfolio.

Speaker Change: And there are not committed.

Speaker Change: As of as of now and also we're not at the time.

Speaker Change: How much we believe that they.

Speaker Change: Would have gone up so I think that is that is the best way to think about the the $30 billion.

Speaker Change: And then on the second part torrent.

Speaker Change: Yeah on the on the cost increases in 'twenty five.

Speaker Change: It's more about the allocation on what is capitalized and not which is driving the majority of that.

Speaker Change: So our total cash out.

Speaker Change: Will be reduced as I said on the <unk> on.

Speaker Change: Previously.

Speaker Change: And there are some elements of not repeated compensations from 24 that comes into that element as well.

Okay. That's clear thank you.

Speaker Change: The next question comes from the line of adapt agenda from Goldman Sachs. Please go ahead.

Sal: Oh, Thank you Hi, Sal backfill.

Speaker Change: I had a question in two parts as well.

Speaker Change: First one is well first of all let me congratulate he lives.

Speaker Change: As I was walking manners and for being very brave and we can see.

Speaker Change: <unk>.

Speaker Change: Capex is up.

Speaker Change: But he is the right thing to do.

Speaker Change: A question about this why don't always thinking two or three steps ahead, right here and I was thinking that week and potentially in the median term power prices coming down some contracts expiring.

Speaker Change: Is there a risk in that.

Speaker Change: I don't have a business like that when you take capex down.

Speaker Change: And Karen property at some point begin to plateau. So is there a risk that you have 2030 net income not EBITDA is actually very similar to what you're going to see in 2026, because you know fixed costs continue to go up and your margins are coming down so.

Speaker Change: I guess the question is what's the priority.

Speaker Change: Here, you know beyond that level do you think.

Speaker Change: That point, Joe that's unfortunate that will be in check so it.

Speaker Change: Is it market growth.

Speaker Change: Growth, you're going to start to increase investments or do you think that the.

Speaker Change: Fortunate that we'll be in an acceptable level much meaning going back to about 30% much later and dedicate so we should not expect any optionality on growth before maybe much later in Medicaid. Thank you so much.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: Bathroom show, so I think.

Speaker Change: I understand the question and so so.

Speaker Change: First of all on the on the on the power prices in and on the sensitivities schedule to our earnings and our ethical and thereby our fortunate dead.

Speaker Change: Just just just reminding you.

Speaker Change: About that at a an important part of our.

Speaker Change: Our value proposition in Australia is that we are that we have roughly 80% of contracted revenue in our.

Speaker Change: In our business and we do a we don't specifically guide on that as you know, but we do expect that that that proportion will be will be raw feed is aimed towards the backend of of the decade.

Speaker Change: And then a.

Speaker Change: I, it's not for me today to sort of be very specific or speculate in it in our if all were to net debt levels.

Anton: We have Anton has has been quite clear about our XP our expectations in the in the short term.

Anton: But it is not a part of it is not there for us to speculate in in the longer term and then of course, the last point I would like to make and in terms of our.

Anton: You can say profitability also in the backend of the of the decade.

Anton: A point that I have made before that that debt right now we are as.

Anton: We are constructing 8.4.

Anton: Gigawatts.

Anton: And and as I'm sure you can appreciate that there is not our expectation for future construction levels also towards the backend of of the decade.

Anton: And with the projections that we have had this year today.

Anton: And obviously also means that we will.

Anton: Into two hour costs.

Anton: And the right sizing.

Anton: Of our organization, especially towards.

Anton: The back end of the decade, when we have delivered on our execution program that would also have implications on our numbers.

Anton: Thank you so much.

Speaker Change: The next question comes from the line of Caster Blom from Danske Bank. Please go ahead.

Caster Blom: Thanks, a lot.

Speaker Change: And also congrats from my side to your address.

Caster Blom: Yeah.

Caster Blom: I would like to ask on the on the 40 to 60 billion of available.

Caster Blom: Available funds that you have not committed as of now.

Caster Blom: Obviously, there is a there's a hornsea four that could be an opportunity, but what could we also see you you know.

Caster Blom: Thinking a little bit out of the box here could it also be that you could see.

Caster Blom: Attunity is of consolidating stuff here could it be that it could all end up going into onshore because that's where you see the opportunities I I heard you sort of on the call being very clear in saying that it is it comes down to value generation, but just sort of trying to understand how how far you would take that.

Caster Blom: And.

Caster Blom: Given that you still have sort of a legacy of being an offshore wind developer I hope you sort of understand where I'm heading a little bit a little bit sort of talking to the.

Caster Blom: The strategy of sticking to PNM and a developer of offshore wind and then after what strikes you to sell some of that development.

Caster Blom: Or whether you would be more opportunistic in terms of just searching to where the value lies.

Speaker Change: Thank you thank you Caspar.

Caster Blom: No.

Caster Blom: So why aren't you for consolidation and onshore.

Caster Blom: So on the on the Hornsea four first and foremost.

Caster Blom: Of course, we will.

Caster Blom: We fully fully appreciate that there is a very big and very.

Caster Blom: Important project.

Caster Blom: And we remain.

Caster Blom: Pleased with the outcome of of ethics.

Caster Blom: Last year, and we are right now as we speak moving moving the project.

Caster Blom: Ford towards a potential if I D.

Caster Blom:

Caster Blom: If we take <unk>, we will do it very likely throughout.

Caster Blom: 25 simply because of the obviously the regulation in the in the UK, where you have to meet your milestone delivery date in the beginning of 2618 months After award.

Caster Blom: We are we are.

Caster Blom: Will obviously not be moving their project.

Caster Blom: Two if I E. If we are not fully.

Caster Blom: Comfortable with the value creation of the project it is value over volume Voss and that will clearly also be the case for Hornsea four.

Caster Blom: That being said.

Caster Blom: The reason we are sort of.

Caster Blom: Happy with the opportunity.

Caster Blom: <unk> is also clearly due to the fact that if there is anyway anywhere in the world, where where a project of that scale makes sense for us. It is in the U K and if there is any way any place any place in the U K. It is in the Hornsea show.

Caster Blom: So we are moving that project forward it should be projects that we will carefully consider.

Caster Blom: And with respect to sort of your appointment or can you.

Caster Blom: But what what what can you do with ammonia also OSI as I as I hear you.

Caster Blom: And so so we will first and foremost prioritize the most financially attractive opportunities.

Caster Blom: Two inches.

Caster Blom: And in the regions, where we are.

Caster Blom: But also with our strategic emphasis on offshore wind.

Caster Blom: This is in our U S, where we have the most distinct competitive differentiation differentiation and also the most unique capabilities in many ways across the full lifecycle development construction and operations.

Caster Blom: We remain committed as I said, two two onshore wind solar battery and carbon capture.

Caster Blom: And we will as it moved moved the best project forward, but of course offshore wind is where we historically have deployed the vast majority of our cancer. They would also be the case going forward.

Caster Blom: In terms of consolidation in the industry I don't think that Asia that is needed for me to speculate about that today.

Speaker Change: Thanks, a lot of restaurants.

Speaker Change: The next question comes from the line of Paul Knight from Morgan Stanley. Please go ahead.

Paul Knight: Hi, good afternoon, everyone.

Speaker Change: Yes, congratulations on the hero and good luck.

Speaker Change: So there are lots of questions can I just pick up on the Hornsea four one place.

Speaker Change: I'm still a bit confused on the previous answer you said, you're pleased with the outcome.

Speaker Change: Moving to a Friday, but you do seem to be questioning the value creation.

Speaker Change: You have a stabilized inflation linked cfd, so but why is this questionable.

Speaker Change: If I may say it sounds like Capex was higher than anticipated given a previous answer.

Kevin: And Kevin You mentioned, you were going to be more transparent on projects would you mind.

Speaker Change: Advising sort of where the capex would be for this project.

Speaker Change: And whether it would be covered by that 40 to 60 billion of uncommitted Capex has a multipart question on the Hep C. So thank you very much.

Speaker Change: Thank you thank you Rob.

Speaker Change: So the last part of your question, yes, the onshore for would be one of the projects that would be part of.

Speaker Change: The uncommitted or committed.

Speaker Change: Capital of 40 to 60 billion Danish.

Speaker Change: In terms of your comments on the on the value I would not.

Speaker Change: I'd say that it is questionable.

That was not my my intend to at least what I would say is that and this is a very attractive project for us.

Speaker Change: But and if I D really means something that's the point in time, where you commit.

Speaker Change: For for the long run and obviously right now where while we of course as part of the beat had matured.

Speaker Change: Case as much as it makes sense what we're of course doing now is a sort of further maturing the case and and also talking to the to the two.

Speaker Change: She led key suppliers.

Speaker Change: Et cetera, basically affirming up the cage towards an F E M.

Tom: And before that work is done and before and before Tom and I have been through every detail of a case like that.

Is not prudent for me to be very bullish on whether or not we taken if I D.

Tom: And nothing nothing has changed if you will since we since we built the case.

Tom: And then specifically on your point on on Capex.

Tom: I I don't want to disclose.

Tom: Our specific capex projections for Hornsea four.

Tom: At this stage, but of course I'm sure.

Tom: You can find some relevant benchmarks in the Hornsea Sean.

Speaker Change: Thank you I'll turn it over.

Speaker Change: The next question comes from the line of Jenny Ping from Citi. Please go ahead ma'am.

Jenny Ping: Thank you very much and I've got a couple of questions on slide 14. Please.

Speaker Change: And I think.

Speaker Change: Just looking at the sources of funds I guess I wanted to ask the following one and with regards to hybrids what sort of conversations have you had with the rating agencies, because seven and a half a cent.

Speaker Change: 220 billion it seems like a big number in terms of a hyper capacity is that.

Speaker Change: Something that you've already had a confirmation from rating agencies that they would allow.

Speaker Change: Secondly, just on the tax equity P. Three already sort of touched on that in terms of your expectations of.

Speaker Change: E. A R S AR allowance, but when do you expect to get the cash for it and then thirdly just on.

Speaker Change: On partnerships and divestments, if you can give us any.

Speaker Change: Any more granularity around which assets that you are looking to sell are above and beyond what's already been said in the past that would be helpful. Thank you.

Speaker Change: When it comes to their they are hybrid part of the 50%.

Speaker Change: The cap of hybrid is really it.

Speaker Change: It's magically 15% of the total capitalization.

Speaker Change: So in that regard I think the sort of the clearing path is.

Speaker Change: Yes.

Speaker Change: Very clear to put it this way.

Speaker Change: So in that sense.

Speaker Change: And as I said, it's it's a it's a piece of the funding plans going forward, but it's not a big piece of the pending patents going forward.

Speaker Change: When it comes to the tax equity part a the timing of that credit is really on the commissioning.

Speaker Change: The project.

Speaker Change: So that's the timing of that exactly.

Speaker Change: The next question comes from the line of Pete.

Deepa: Deepa <unk> from Bernstein. Please go ahead.

Deepa: Thank you so much and congratulations John Smith.

Deepa: For my question is Hollywood adaptive can be out on a number of strikes or the Capex guide. It seems like it's more backend loaded so what I wanted to understand if you have this delian fundraise run that as a higher cost.

Deepa: But it doesn't seem like your Capex for 'twenty four 'twenty five 'twenty six 'twenty seven has changed so just wondering what you're doing to get the metric back to that 30% net debt by 26 in your chart and can I also as part of the divestment program confirm what your assumptions on Sunday.

Deepa: Wind is and you know with adapt which has been factored.

Deepa: On the AR on the Oh.

Deepa: Part two I do think that there in the <unk>.

Deepa: Path forward to that is really to go alone.

Deepa: And say that we are assuming the farm downs being spread out for both 25 and 26 in sort of an even rate.

Deepa: In addition to that if you take the <unk> 24 and add on the cancellation payments.

Deepa: And then some additional cost efficiency measures going in both for <unk>.

Deepa: 25, and 26 and 27.

I would believe that you're going to get very close to the.

Deepa: 30% of all the net debt level.

Deepa:

Deepa: On the <unk>.

Deepa: Second part I forgot that.

Speaker Change: Can you repeat please what's the assumption yeah, what's the assumption on the Sunrise wind farm down in your plan that you're presenting today.

Deepa: Happening sorry.

Deepa: Sorry about that.

Deepa: And as we've been talking and talk talking about before we are not.

Deepa: Saying anything about specific farm downs or specific assets that we have in the market and we are working on but.

Deepa: Our modus operandi on our business plan is to of course.

Deepa: The ordinary one too.

Deepa: Only 50% of our assets.

Deepa: And that of course is going to include the 100% ownership we have on the projects had been running.

Deepa: So in that sense.

Deepa: But the timing of such we have not been very clear about that.

Deepa: But have you factored any risks of any delays if it's something that's amazing was included in your new plan.

Deepa: When it comes to yeah. The answer is that is of course, yes, we have factored in certain elements of delays in the farm downs and but that is not sort of in the.

Deepa: The effect of the actual it's more capital availability element than sort of a net debt element.

Deepa: And that we're looking at.

Okay.

Deepa: Thank you.

Speaker Change: The next question comes from the line of Jeffrey from Deutsche Bank. Please go ahead.

Speaker Change: It's a follow up on the Sunrise.

Speaker Change: Part of that.

Speaker Change: Just wanted to get your sense of how confident you are that you could set a project like Sunrise ahead of its commissioning date.

Speaker Change: Second half of 2027, given the complications of Athena project. So.

Speaker Change: How comfortable are you could you could sell that.

Speaker Change: And then also just on the U S projects Revolution and Sunrise.

Speaker Change: Do you feel that the O U S supply chain.

Speaker Change: The continued construction of those products could be compromised by a lack of demand from the build out of offshore wind projects.

Speaker Change: Okay, and if you can't get your best why do you think that supply chain will be robust.

Speaker Change: When it comes to the the farm down.

Speaker Change: Have a long experience on on making sure that we have good partnerships and investors in.

Speaker Change: Assets.

Speaker Change: In different parts so in that sense.

Speaker Change: Of course, we are sort of pre wiring. This in the market that we are talking to investors, who administers all the time.

Speaker Change: Having said that we of course are.

Speaker Change: We are aware and see that the market has changed the last year and I think we've been talking about that and that is more assets held for sale now than it has been for quite some time.

Speaker Change: Having said that we are still.

Speaker Change: Sort of geared on investor interest in the year farm Downs that we are working on right now.

Speaker Change: Yeah, and if I can.

Speaker Change: Take the supply chain point, Hi Ali.

Speaker Change: So sure.

Speaker Change: I think coupons to to the question.

Speaker Change: First specifically on Revolution wind and Sunrise. It is predominantly a European supply chain delivering on the projects of course with <unk>.

Speaker Change: With elements of of local presence, but but but but but no. We don't see any implications whatsoever on the supply chain of those two projects off you can see the two current uncertainty in the market.

Speaker Change: Of course when.

Speaker Change: When you look at U S offshore wind going forward.

Speaker Change: And we are cautious sort of carefully following.

Speaker Change: Following the market right now and we of course he is on.

Speaker Change: So colleagues are moving forward with with the projects and also a couple of colleagues who are stepping away from projects and I said, we are firmly committed to moving forward Revolution wind and so on right but of course everything on the other side of that we will carefully consider and of course.

Speaker Change: Over time.

Speaker Change: That trend continues that that could of course have an implication on on the supply chain in the U S. But I think it is too soon to have a firm view about that.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: The next question comes from the line of Mark <unk> from UBS. Please go ahead.

Mark: Hello, Thank you for taking my question.

Mark: Last one when you presented a year ago, you pointed out.

Mark: Hornsea, three which is the material farmed down because the capex is so high.

Mark: You gave some extra color around that which ive of course yeah.

Mark: Expecting to have that fall downtown in Q1, 'twenty 25, I was just wondering what do you expect it.

Mark: Time is and if I, if I think back to your you know what.

Mark: You you and your colleagues presented many years ago and you're justified why you didn't use project finance and you use 50% farmed downs and equity funded I mean surely there are other solutions to extract capital from project. So as you saw with the Brookfield tell so can we expect.

Mark: Cheap potentially to look at.

Mark: Other ways of structuring transactions off of it.

Mark: Selling law check what your interests for example project project finance. Thank you.

Mark:

Speaker Change: And then it's really it's my turf to talk about the the farm downs known Mark So Oh, the when it comes to the timing of the Hornsea three yeah of course, it is a big project.

Speaker Change: As a result of that and as we said last year, we are working on the farm down during the 25.

Speaker Change: And that is still ongoing.

Speaker Change: So the timeline internally has not really slipped.

Speaker Change: And Theres no recollection, you heard that we said the first quarter last year. This year, but we said during 'twenty five and as such when it comes to the structure of these transactions and availability of cash.

Going forward, we are looking at farmed downs as the sort of the most significant part of the <unk>.

Speaker Change: Funding coming from from a from the proceeds and then of course, there's going to be partly some other assets some smaller assets in there too.

Speaker Change: The number to get to the proceeds that we need to reach.

Speaker Change: But other than that we haven't really looked at other types of structuring funding for these projects.

Speaker Change: Thank you.

Speaker Change: The next question comes from the line of Dominic Nash from Barclays. Please go ahead.

Dominic Nash: Yes, good afternoon, and thanks for taking the question and at risk of probably lagging a point.

Dominic Nash: Some of it I think the journey started them on on slide 14.

Dominic Nash: And I think you asked.

Dominic Nash: At that point, which is.

Dominic Nash: We've got 30% of your gross gross.

Dominic Nash: Needs coming from.

Dominic Nash: Farm Downs, and disposals, and Thats, probably what 250 billion entitled for 30% of that 75, and you can just confirm to US that you would have to 2030, but you still have a target of 70 to 80 billion of proceeds between 2426.

Dominic Nash: Am I getting this one wrong.

Dominic Nash: Wrong, which is basically what you're saying is that everything you do in 'twenty four 'twenty six essentially.

Dominic Nash: It's essentially the whole farm down for.

We ended the decade.

Dominic Nash: And secondly on August six the market could you give some color on how how the secondary market is going advised market a sellers market.

Dominic Nash: At the moment and whether your buyers are more inclined and the best price to get post commissioning all pre commissioning places. Thank you.

Dominic Nash: Only on the logic.

Dominic Nash: It's a it's true that most of our farm downs and proceeds will happen until.

Dominic Nash: 26.

Dominic Nash: And from then on it's a.

Dominic Nash: Of course, there's going to be more limited.

Dominic Nash: And more margin off as we see it now.

Dominic Nash: Nothing in the precision of 27% to 30 is then not sort of as precise as 27 targets or the phone.

All of the job that we need to do to 27.

Dominic Nash: So that is correct when it comes to the market as such it is although it is a buyers market out there on the asset side, we see that on the <unk>.

Dominic Nash: Interest or the return requirements from from the buyers.

Dominic Nash: It is as you've seen in the market Super both the last few weeks as well as you saw it both in the third and fourth quarter of last year. You saw that there were more assets coming into the market with more projects coming into market for either derisking or floor is selling so in.

Dominic Nash: That sense.

Dominic Nash: It's absolutely a buyer's market out there having said that there is as we see it.

They all have good interest for high quality assets with a high quality operator.

Dominic Nash: And we do think that who as I said, we have good traction, whom the farm downs as we are progressing those.

Dominic Nash: As we speak really.

Dominic Nash: Okay. Thank you very much.

Speaker Change: The next question comes from the line of Helane next Kilovolt Franco <unk> from Dnb markets. Please go ahead.

Helane: Hello, and thank you for taking my question.

Speaker Change: I was just wondering if you could walk us through what that's all remaining before you even get here.

Speaker Change: And then just community Goldman Sachs credit, that's far far Revolution, and some nice and buy one that you had expected.

Speaker Change: To get those subsidies.

Helena: Hi, Helena restaurants here. Thank you very much for the question. So so sort of in in terms of the in terms of the steps I.

Helena: I think what what the important thing to take away is that the that we.

Speaker Change: We have based our investment decision on our on the current valid treasury guidance.

So therefore, we we are basically working towards that we will just continue our our normal course with with our with our energy community show. So it such there Arnaud you can say specific steps that we need to adhere to going forward.

Speaker Change: Both with respect to two revolution wind and.

Speaker Change: As always of course on the on the on the monetization of tax credits.

Speaker Change: That's of course, what you are then working on is torn to Ultrashape people.

Speaker Change: Between now and the end she o'dea for both projects, where we of course are further progressed on Revolution wind, where we are and you can see in the market.

Speaker Change: Also because evolution wind is on our more progressed timeline and sunrise with an expected U D. At the back end of a 26.

Speaker Change: For full revolution in the bag and of 27 four for Sunrise.

Speaker Change: Okay.

Speaker Change: And when will you sort of get the final approval from from U S. Government that is held against those for sure.

Speaker Change: Right.

Speaker Change: And then 95% as part of de Luca.

Speaker Change: It's a it's a.

Speaker Change: It's a process in the U S, whereas I'm not quite sure on the actual practical steps, but I do think it actually applies after commissioning you're actually doing their tax return and then you get some credits.

Speaker Change: But I have to refer that sort of administrative.

Speaker Change: Understanding questions to IR afterwards.

Speaker Change: Okay. Thank you.

Speaker Change: The next question comes from the line of David Paz from Wolfe Research. Please go ahead.

David Paz: Thanks for the time.

Speaker Change: Just had a question on Revolution can you.

Speaker Change: Please describe the move to the second half of 'twenty six.

Speaker Change: 2026.

Speaker Change: Why.

Speaker Change: Can you describe the process from end of construction on May 25, two commissioned in the second half of 'twenty.

Speaker Change: Yes.

Speaker Change: Polluting so show the key.

Speaker Change: A key driver behind that change in the timeline as you are alluding to is the completion of the onshore substation in the India was horses scope.

Speaker Change: That debt has been.

Speaker Change: The key driver, where we have added.

Speaker Change: Roughly roughly 12 months to two hour schedule and delayed issued a year or two to the back end of the of the 2026.

Speaker Change: And the eventual scope is progressing according to plan. We obviously are following it very very closely at.

Speaker Change: On the on the critical path.

Speaker Change: But again moving forward. According to plan and that is the key driver behind the change in schedule.

Speaker Change: Yeah.

Speaker Change: Got it thank you.

Speaker Change: Next question is a follow up from Peter B, Scott from Bank of America. Please go ahead.

Speaker Change: Yes, hi.

Speaker Change: Just how.

Speaker Change: A few questions about the timing of Sunrise.

Speaker Change: Various aspects of that I'm not sure.

Speaker Change: Excuse me if you have a miss.

Speaker Change: I'm not sure if you've actually sort of addressed whether.

Speaker Change: Your current.

Speaker Change: Efforts to shore up your capital structure going to be.

Speaker Change: Sufficient.

Speaker Change: A possible scenario, but you call them sell it.

Speaker Change: For whatever reason I'm, sorry could you clarify that place.

Speaker Change: And when it comes to.

The planning and the farm downs in the 30% funding parch.

Speaker Change: As we have said we have several alternatives in the portfolio.

Speaker Change: And but.

As I said earlier the element is of course.

Speaker Change:

Speaker Change: That we are our modus operandi is to get down to 50% of our 100% assets.

Speaker Change: And therefore.

Speaker Change: That's still our aim and our goal.

Speaker Change: When it comes to the contingency elements and how are we going to run.

Speaker Change: Alternatives if in case any of the assets is not going to be able to find out that is of course cater debate in sort of the contingency measures that we have.

Speaker Change: But other than that I cannot comment to that any more than that.

Speaker Change: Okay.

Speaker Change: The next question is a follow up on what pulled me from Morgan Stanley. Please go ahead.

Speaker Change: Hi, Thanks, just following up on the U S and come to you and your last question hasn't.

Speaker Change: That hasn't been asked him how seriously do you consider some of the state of the risks in the U S regarding potential relocation of your acreage under 10 minutes for Sunrise and resolution to progress them.

Speaker Change: The first follow up.

Speaker Change: Secondly.

Speaker Change: Conceptually I mean, there's lots been questions on found times, but.

Speaker Change: It sounds like you've got lots of multiple assets out there in the market to try and get the proceeds does all of that.

Speaker Change: And so conceptually.

Speaker Change: U K bundle sale of high return operating projects you did in October.

Speaker Change: Our needs must event to help the balance sheet firepower. If you will or is this something the market should become more used to them for a variety of reasons that the 50%, 50% sell down preference just isn't adequate anymore.

Speaker Change: Lastly in high level, one for restaurants.

Speaker Change: Very high level, what would you do differently to the previous management, given the challenges of which you've inherited.

Speaker Change: You very much.

Speaker Change: Okay.

Speaker Change: Thank you very much were up three three questions I will I will take the first and the third.

Speaker Change: So one so with respect to the to the U S and I understand your question sort of being around current and sort of the political and regulatory environment. So we are very closely following all relevant policy developments in the U S and of course have been for very long time.

Speaker Change: And what we are doing right now is that we are reviewing the executive order on wind energy that came out in the twenties.

Speaker Change: And then we are as I said earlier on the call are awaiting cabinet secretary to take office, which is happening as <unk>.

Speaker Change: As we speak is Oh, so as you know and I've talked a dog broke them.

Speaker Change: It has been a stated as the secretary of interior and Chris Wright is the secretary of energy and.

Speaker Change: And of course, we are now awaiting for sort of the view on on how to how to implement this aura.

Speaker Change: That's a more general comment because I think you really truly need to differentiate here between as I've said assets under construction and then.

Future development.

Speaker Change: So as for specifically Revolution in Sunrise.

Speaker Change: Remember these are active in construction and we are fully fully committed to moving them forward with these projects and deliver on our commitments.

Speaker Change: So therefore, we do we do not expect that the executive order will have any implications on when it.

Speaker Change: So on the under construction for of course for Flash is under development as potentially a different situation.

Speaker Change: And then the then as for the last question.

Speaker Change: It's not it doesn't feel right for me here today to to go into details about what what I will do two different than than previous previous management.

Speaker Change: And imagine I to two different versions.

Speaker Change: And we have two different backgrounds.

Speaker Change: We have a shared passion for the green transition and I have enjoyed working with mess.

Speaker Change: And so so where I I will I will leave it at that.

Speaker Change: For now and then you can be rest assured that going forward I will do my absolute utmost to deliver on the projects that we have put forward in the adjusted as IMU today.

Okay.

Speaker Change: On the AR on the farm down question.

Speaker Change: Going forward I do think that.

Speaker Change: You will see us more coming back to the ordinary business model of.

Speaker Change: Ordinary farm downs to 50%.

Speaker Change: And see the Mccullough transaction as a sort of or the U K minority transaction as.

Speaker Change: As not not necessarily a one off but not.

Speaker Change: Significant element of proceeds going forward.

Speaker Change: That's very clear thank you guys.

Speaker Change: The next and last question comes from the line of Jenny Ping from Citi. Please go ahead.

Jenny Ping: Hi, Thanks, very much sorry, I got cut off on it and my last question. So the 15% just go back to the hybrids, 15% threshold.

Jenny Ping: From what I can see you're already close to that so again just checking here.

Jenny Ping: Really do have to keep telling you right. There's lots of capacity adds pay your slide 14.

Jenny Ping: Can issue hybrids.

Speaker Change: And then secondly, slightly differently just on going back to Capex.

Speaker Change: Thank you for the explanation on the 30 million difference, but looking at a slightly different way looking at offshore.

Speaker Change: Typically if I take off.

Speaker Change: The 14th affects the veneer, which most of that sounds like called before.

Baltika three away.

Speaker Change: Away from the 180 that was there before your starting point on a like for like basis. It really wasn't that he compared to the 173 that you talk about minus seven onshore in 'twenty 'twenty four but that's actually a 20 plus percent increase in the underlying offshore capex can you.

Speaker Change: You shed a bit of light around that whether that calculation is correct or if there's any sort of adjustment that's needed. Thank you very much.

Speaker Change: When it comes to the hybrid part we were at 13, 6% at year end, So youre right, where we're close and as I said earlier, a hybrid is not a significant part in our funding plans going forward.

Speaker Change: And to the other questions.

Speaker Change: <unk> managed to follow your numbers.

Anthony: Thank you and thank you talked there hi, hi, Anthony So one.

Speaker Change: Are you you shouldnt read it like that.

Speaker Change: So one so first of all remember that voyage get through three years. An example that you are alluding to what we have said before is that.

Speaker Change: Is all of our project onto reconfiguration that we will only.

Speaker Change: Again also move forward. If we can can find a way to make the business case stag, albeit in a very robust manner. So so we have not are intended to provide any you can say at specific different capital allocation split.

Speaker Change: We and our technologies in the 40 to 60 billion that we have in in the in the uncommitted capital.

Speaker Change: So I think the the sort of the starting point is is the comments that I made earlier today about our continued commitment to offshore as way, we will deploy the vast vast majority of our capital.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen that was the last question I would now like to turn the conference back over to CEO Rasmus ever for any closing remarks.

Speaker Change: Thank you all very much for joining and I appreciate the interaction I appreciate the interest and as always if you have any further questions. Please do not hesitate to reach out and our IR team will be here to answer them.

Speaker Change: S S S F or myself and we look very much forward to continuing the dialogue with you all on the road.

Speaker Change: Thank you stay safe and have a great day.

Speaker Change: Yeah.