Hexicon Stock

Hi, everyone, and welcome. My name is Marcus Thor. I'm the CEO of Hexicon, and I will spend the next 20 minutes or so to present to you an update on what's happened in the floating offshore wind market, what's happened here Hexicon and how we look at the future. I will today go through a market update, run through our portfolio development, significant events during the quarter. Then I'll do a deeper dive into South Korea as well as our technology and ending up with looking ahead.

So starting off with the market update. No doubt that the industry remains in a rather weak position. With that said, there is certainly some political momentum that continues and in some aspects, actually grown as well. Global wind installation has been delayed over the last few years. All in all, floating offshore wind is a 277-megawatt installed as today. A few years ago, we're certainly hoping for a higher number. Long-term projections remain very high, however. Specifically, if we look at the U.S., a market that certainly has taken some big turns, some big offshore wind projects there fairly recently had the permits withdrawn. So these were permitted projects in some cases where they actually started construction that had their permits taken away. That's gone in court. And in fact, the Federal Court clearly recently, rule in favor of these projects, and some of them have now resumed construction. So we'll see how that continues to develop, but it's definitely a market that we follow fairly closely. And here in Europe, in Poland, a Baltic Sea neighboring country, had the first ever floating -- sorry, offshore wind auction, not floating wind, that had pretty decent result with 3.4 gigawatts of results.

Over in the U.K., where we sell a co-owner in the Pentland project together with CIP. In January, mid-January, results of their allocation around 7 were announced that did have a floating budget, so specifically, a specific pot for floating wind and all in all, across all technologies, a very good outcome of that auction as well. Over in Asia, in our market being South Korea, probably the most important market for Hexicon at the moment, there was an auction at the end of last year resulted in just shy of 700 megawatts of bottom fixed projects that were auctioned. There on top of auctions continue to be conducted. The new President since the summer, he's now new Ministry of Climate Energy & Environment is now fully up and running and operational. And in fact, next month, we're expecting the results of what the new auction will look like. They'll probably be one as we see in April or May this year again.

And finally, over in Japan and Taiwan, 2 very big long-term markets continues with political push with advanced frameworks and policies, but these we see as longer term, especially when it comes to the floating side of offshore wind. So if you look at our own portfolio and some developments in projects, first of all, which I'll come back to as well a significant event. We did press release, an impairment of our Twin Hub project. This is a project we've certainly spent a lot of efforts on. It's a rather small scale technology project with macro climates, difficulties, investor appetite, et cetera. This is not a project that we could divest at viable terms within the time frame we had. So reflecting reality, this is an impairment that would obviously not take lightly, but one that was needed, reflecting reality. It remains a priority for us, of course, to find a good place and home for that project going forward. The Pentland project we just mentioned in terms of securing a CfD. Now what the project did do during the quarters of the last quarter last year was that it secured 3 new investors, U.K. institutions into the project, preparing itself for the construction phase as well.

For ourselves and our priorities in the portfolio, it certainly relates to divesting projects. Selected projects get cash flows in for Hexicon, that's the priority. There are no plans at the moment to spend our portfolio further. Obviously, there's market surveillance. We are prepared for when that moment in time comes with cash in. But for here and now, divestment is the focus, ensure money comes in, expansions comes afterwards. If we look at some significant events across the period, in October, we held an AGM to vote for issuance of warrants. They were directed to the lenders within our RCF, so a revolving credit facility with a few Swedish lenders. It's an RCF that we put in place a few years ago. And this was an extension that was decided upon during the summer, a 2-year extension. And as part of that package and agreement was also warrants in Hexicon AB. Following a wider portfolio review, the impairment of TwinHub was announced during the quarter, SEK 118 million impairment of the TwinHub project, which is a reflection of the market as it stands today. It's a market that remains rather challenging.

If you look at when this project secured its CfD, which was 4 years ago almost now, the markets looked very different. These are more or less the 4 years that we've had of Ukraine war, high inflation rates, cost period interest rates, capital costs gone up and not the least, a lot of issues across the supply chain of offshore win. So the offshore wind industry looks very different today than it did 4 years ago. This impairment is reflecting that reality, unfortunately. With that said, as I did mention, we are continuing to spend efforts on ensuring a good place for that project going forward. It does continue to have certain costs and liabilities for Hexicon, which we are focusing hard to get out of. We did put in place a smaller loan as well of SEK 2.8 million. That's a need to spend on some smaller scopes that is out of scope of the Nuveen facility. So Nuveen's funding is earmarked for certain costs, cannot go into all costs. That deal as well, included a small amount of warrants that is subject to AGM that we will hold shortly. And as we mentioned before, so CIP during the quarter, did secure 3 new investors, U.K. institutions, namely Great British Energy, the National Wealth Fund and the Scottish Natural Investment Bank, all 3 very good names, bringing this forward to the construction phase. And after the quarter, mentioned both before, we did put up the controlled balance sheet. This is a reflection. So this is for Hexicon Holding that owns several projects, both the Korean project, but also the TwinHub project.

So the impairment of TwinHub led to a controlled balance sheet procedure in Hexicon Holding that did conclude and result in surplus values, equity intact with margin mainly due to the South Korean project, all gone through the procedural aspects of it and, of course, verified and confirmed by our auditor as well. And finally, that's also the period, the CfD results were announced on the 14th of January, in which the Pentland project were one of the winners. And if we look over to South Korea, which remains a key market for Hexicon due to the fact this is where we hold our -- the combination of commercial scale and maturity. This is where our most valuable project sits at the moment. And a few things have happened recently there. The government in December presented its offshore wind infrastructure expansion and supply chain plan. So continues to push the development of offshore wind, how to develop its own supply chain, which traditionally has had a fantastic and continues to have a fantastic shipyard industry. That is transitioning into being able to deliver to offshore wind as well. So this part of this plan continues to put emphasis on how to take that even further. The plan also renewed the 25 gigawatt target for 2035, which means they continue over the next few years, a lot of new offshore wind installations needed.

If we look at MunmuBaram within this market, this is a project that is qualified, so holds all the prerequisites to participate in the country's auctions. That's very much where our focus lies to prepare ourselves for that auction. Part of that is to add partners and investors into it. Hexicon is not able to go through an auction of this scale and size ourselves. We do need additional partners into it with stronger balance sheets. That option or going through an auction like that, confirming securing that revenue for 20 years is potentially the highest step change in value during the development phase. So this is very much on top of our priorities is to ensure that partners are obtained to be able to go through an auction.

Which auction is yet to be determined. There is, as I said earlier, one that is likely to occur April this year, potentially one towards the end of next year as well. We will not participate in the one in April or potentially May this year. But thereafter, all options are open. On the technology front, a lot of important milestones occurred during last year. We have gone through a full so-called integrated load analysis, with turbine supplier Mingyang. So having gone through an ILA of this kind with a commercial vendor is something that quite few bolting wind foundation suppliers have done to date. And what it does is really it confirms that the foundation of such copes with turbines. It can withstand and operate environmental forces and allow turbines to operate within their limits and margins, so maximum accelerations, movements, et cetera. it doesn't conclude that no additional developments are needed.

You can continue, of course, and we will continue to develop and mature and refine this technology, increase its competitiveness. But as a starting point, it ensures that there is a robust base to start from that it withstands forces, it can operate, they can serve the turbines and in this case, quite large turbines as well. Additionally, what we spend efforts on is to develop a platform controller system. So not only a system like ours, which holds 2 turbines on the same foundation, not only are we in need of the individual turbine controller, but we also need to develop a controller that looks into the pair of turbines so that the one turbine knows where the other is and operates. So this is something we've also joined to develop in Mingyang across last year. And finally, worthwhile mentioning as well that during the third quarter last year, we did announce that we put in place an MOU with Wall Street for the company within the Soya group here in Sweden for the development and commercialization of our technology.

And the conclusion of finalization of a lot of ingredients within that MOU is still to be determined, something we are working with and that we will announce shortly. So if we now look forward, our priorities are more or less the same as they were last quarter. On projects, it is very much a focus on divesting selected projects. The markets over the last few years have not allowed us to divest at the pace that we wanted. If you go back a few years, the IPO and onwards, the plan was really to divest selected projects as soon as the portfolio as a whole is large enough and diversified enough. This was concluded at that point in time we reached probably already 2 years ago. The market conditions have not allowed us to divest at the pace that we wanted. So we are fully aware of that. There's nothing we prioritize further or higher than to do just that. So divesting projects remains a key priority for us.

If you look at the technology, it's very much on the one hand, to ensure that values are maintained, as well as making sure that those values and the IP we hold finds a home that allows it for to be commercialized. And this is partially the MOU that we put in place in the third quarter last year with Wall Street aims at doing that. So that the IP, our patents, finds a home with the right partners to be commercialized, and we do need partners in that to commercialize it. And finally, on the financing operational side of things. What we need to do is to ensure that Hexicon secures its runway in the best possible way until money starts coming in from divestments. Not the least, more meaningful such that we are seeing in the near future to be from, first and foremost, the South Korean project. And to achieve that, we are improving our operational efficiency, so reducing our burn rate. This will take an action across several quarters in a row actually. And not the least over the recent period where we reduced our organization quite significantly. To ensure that runway to divestments, which is the key priority and from there on, of course, start again growing and investing in future projects.

But first things first, and the focus really remains in operational efficiency to get us to the point in time where money starts coming from divestments, and the focus here now is clearly on divestments. So with that said, thank you very much for your attention.

So far, I should say. The 2 questions have come in. I'll read out and thereafter answer, of course. And the first one reads, following the impairment of the TwinHub project, you announced that the controlled balance sheet concluded that there is sufficient value in Hexicon Holding for its equity to be intact. Can you elaborate on the values that you see and for which projects?

And certainly a question that I really see where it's coming from. And I appreciate the wish to see what exact values we see and for which projects. However, to make such values publicly available hold certain risks as well. And first of all, early-stage projects and especially in a novel industry like this, is quite uncertain. So we always need to work with quite big ranges and there are uncertainties in these valuations. That's the first probably aspect that we always need to consider.

The second is that if a number or value of a project is made available, that puts a marker out there that will remain there. And this, regardless of that being slightly too high or too low, that marker is there and can negatively influence negotiations that we're in or are about to undertake in terms of divesting such projects. And this latter point is probably the most sensitive one because that is our key priority, to divest at most favorable terms. So anything that risks jeopardizing that is something that we want to avoid in the possible way. So probably what I will say is we talked about it several times in the Board, how to, in a good way, make these numbers available.

At this point in time, when the need to divest is high and processes are ongoing, these risks are, to date, at least, something that we've not been willing to take to potentially jeopardize a divestment. We'll continue to have those discussions, continue to consider it and hopefully be able to make available such valuations. But here and now in terms of the controlled balance sheet procedure in Hexicon Holding, what I can say, probably a little surprise is that the lion's share of the surplus value that was included in Hexicon Holding stems from the South Korean MunmuBaram project. And worthwhile emphasizing again as well is that the whole balance sheet -- or sorry, controlled balance sheet procedure and conclusion was, of course, done in the utmost correct way and reviewed and controlled by our auditor.

Second question here. The share price values that was mentioned in the press release on 30th of January, why has Hexicon not been able to realize them in any transactions yet?

Yes. I think I've covered quite a bit of it in the presentation, but the market continues to be weak, a lot of uncertainties are displayed globally. However, as we look longer term at this, we certainly think that there is the ability to capitalize on these values and to divest these projects, that remains there. Everything has taken longer than we would have wanted. But the possibility to realize them over time continues.

Number three, do you think that there will be further impairments in the future? I cannot say it yet. But what we can say is that there are no decisions or a need as we see right now for any further impairments across the portfolio. The market continues to be weak. As I said before, I do see -- my view is at least that across the year, we'll see some improvements that should really have reached better levels across next year. Whether we get to that point and we start realizing our plans before that, before a further need for additional impairments, I cannot say for sure right now. But what I can say is that here and now today, we're not seeing a need for further impairments in the portfolio.

And the last question here that we've gotten in is the following. Can you comment on the CfD win for Pentland and what this means for Hexicon? Is this a project that can be divested? First of all, certainly a great results, huge milestone. When talking about the Korean project, I mentioned that going through an auction and securing a PPA is probably the biggest value-driving milestone that a project passes during the development phase. So that's no different for the U.K. project. So a huge milestone to start with. Yes, on top of that, it is one of the projects that we are in process deliberation to divest. Nothing included yet, but we will potentially be able to get back to you later in the near term about that.

So with that said, those are all the questions. Thank you very much for your attention and look forward to seeing and speaking to you again soon. Thank you.

Good morning. Welcome. I'm here today to give you an update of Hexicon's operations during the third quarter. I will do so, but I will also give you an update as to what is happening in the world of floating offshore wind. So let's get to it. My name is Marcus Thor, and I'm the CEO of Hexicon.

So what we'll go through today is I'll start with the market update. There's quite a lot of things that have happened in the industry. Thereafter going into our projects, which is the core of our business, to look at the portfolio and how certain projects have developed. I'll mention, of course, some of our highlights during the third quarter, and I'll be ending with looking ahead.

So with that said, let me start to give you a bit of an update. And the fact is that it's been quite a few years now of a weak market that is offshore wind in general and not the least floating offshore wind, which is a newer, less mature segment within offshore wind. And in general, one could say, and I'll give you a few examples here. What has happened though very recently now is that we've seen this market downturn, we've seen more and more political action to strengthen floating offshore wind. So political ambitions and actions and achievements in the last period that sort of is needed and act to balance a weaker market in general.

Some of those examples are that over in the U.K., the contracts of different scheme, so the subsidy regime in the U.K. have continued to be strengthened. It's continuing to have separate auctions for floating offshore wind. We're expecting at least 2, 3 potentially more floating projects to participate this year. And the strike price cap has actually been increased, so the maximum price that you can get for floating offshore wind projects.

We've seen auctions continuing in France. There's been 2 new auctions recently. One, I should say though, however, ended up with no bids. Thereafter, we had one that did include bids. Over in South Korea, which is our -- one of our very core markets, we've seen since new President came into office in early June this year, a strengthened with ambitions for renewables in general, increased targets and not the least, a new ministry, which is now up and running, which is the Ministry for Climate, Energy and Environment. So this is a push to be more focused and dedicated to the energy transition.

In general, when it comes to floating wind, it's still a rather small amount of turbines installed. So it's recently reached 277 megawatts in total around the world. And just to give you some feel of what that number is in comparison to fixed bottom offshore wind, which has surpassed 83,000 megawatts. If you look at the table here on your right, it provides an example as to the expected installations going forward in floating offshore wind. And what you clearly see from a few years now of a weak market is that there will be delays. Floating offshore wind deployments will be delayed. And this will, of course, hit Hexicon as well and the general industry. However, what I do want to point out, and this is a bridge over to the next slide, is that our business model and revenue model is divesting during the development phase.

So what you saw previously there in terms of the expected installations, that is actually once a project has gone through the construction phase and is installed and up and running, producing electricity. Obviously, that is what the end game is all about even for our projects, but our business model does not extend that far. We are a developer. So we focus and our core skill set lies within identifying the right market, where is the best area within that market and developing that area to be a profitable project.

Along that way, so the development phase is when we divest, and we've tried to illustrate this where we are active from the very start of this project development phase and have a rather long divestment period. So anywhere between fairly early stage in the development phase, between that and somewhere up until FID, which is final investment decision when a project is ready to be constructed.

And this is really where Hexicon shines as well. This is where our core skill set lies. And every project and market is unique. So we cannot say that this is the timing for all markets. But in general, and as a basis, Hexicon aims as completing the first phase of the permitting, which is the environmental impact assessment. So going through that from having identified the area going through your -- building that business model, identifying how, which environmental impacts are key, doing that work assessment surveys, packaging that and applying for that first permit. With your hands on that is a key early risk reduction and a milestone that we think is appropriate to start looking at divestments. It can be later, it could be earlier. It will depend on specific markets, but that's where our base assumption lies to go to the EIA.

If you look at our projects to date here on the bottom right, we do have projects across our portfolio from prospects all the way to late stage. And we've -- this is not an exact science, but we divided the development phase into early, mid and late, where we currently have quite a few in the early stage and also some in late stage.

I wanted to share this today as well. So this is just looking a few years back and also looking at what's upcoming. And going from the IPO, Hexicon's listed on NASDAQ First North in Q2 2021. And previous to that, there has been a lot of years with a very, very good market. Some might even argue that offshore wind has had a steady increase for about 30 years until somewhere around the timing of Hexicon's IPO. Since then, it's been a few years of a much, much weaker market where valuations have gone down, buyers have become fewer, et cetera.

The IPO as such, however, I think, was success to the extent that we came out to the market with a plan, mainly to invest in a product portfolio build-out. We raised money for that, and that's what we've done since. Beyond the IPO, looking at a few events here that are both positives and negatives. We saw definitely fairly shortly after the IPO in '21 or during 2022, we did see that micro climate -- I'm sorry, macro climate downturn for sure. We did see higher costs, inflation rates and more. However, what we saw and had to take a decision, a conscious decision at that time was how to move forward.

So looking at late '22, early '23, we've reached the point where we had achieved per our plan at the IPO, a big enough and diversified portfolio. So it was time to start divesting. At this time, the market was very, very different. Fewer buyers, valuations come down significantly. So we had basically 3 options to look at to continue pushing on forward is to sell projects at in our opinion, too low valuations. And in some instances, we think at this time in the last few years has been way too low to raise additional capital by emitting shares or debt finance the company to be able to continue to position or maintain at least the positions in our projects for future divestments.

And this is what we did in 2023, when we struck an agreement with Nuveen Infrastructure for a debt financing facility with money that was earmarked for projects, some of our key projects, again, to make sure they continue to be positioned ahead of the curve and to maintain value looking at a market to change and the necessity of these projects over time, obviously, for there or then to believe for there to be value in a future point in time.

Our key project was South Korea and the MunmuBaram project, which we had been developing for several years and most of them together with oil giant, Shell, 80% owned by Shell, 20% by Hexicon. And in 2024, with the new CEO at Shell, they came to a strategy shift, changed completely. They were pulling out of offshore wind in most of their active markets, South Korea being one of them. So we managed to buy this project back from Shell at a very favorable terms. That took a bit of time and then even longer to reach all the necessary government approvals in South Korea to take over full ownership of an energy project like this. When all that had been completed, and we're ready to go out to the market with it, that's when the Korean market more or less froze when the President at the time declared martial law. Then we had a period of around 6, 7 months of political turmoil, a lot of uncertainty.

We fairly early decided that we cannot achieve anything meaningful with the divestment process or the partner search with new investors into the MunmuBaram project. A lot of the people we spoke to were saying, at least on the international arena that South Korea remains an interesting market, but we'll wait until all this is over and settled. And some of the potentially lower-hanging fruit state-owned regional companies in South Korea, they were not even in the position to make investment decisions at this time when there is not a President in place.

So it certainly struck us. It's hit us. We are now, I would say, back in full momentum again. And if you look forward, in the next 12 to 24 months, it's very much a focus on MunmuBaram in South Korea. That's where a big part of our portfolio value lies. And we've got 2 things of priority within this project. It's -- on the one hand, of course, getting investors in divesting at the most favorable terms possible. And secondly, within the project, the next milestone, the real value increasing milestone is if the project is successful in one of the offtake auctions.

And these are run annually, sometimes a few years from time to time, they're even twice a year. So this is an auction where you come in and bid and secure your offtake for 20 years for the project. And we're really looking at a few parallel tracks now in options where you either find new partners before an auction, maybe some before and some after to capture the value increase at least partially, that is having gone through the auction. Both of these, however, is what we plan over the next 12 to probably 18 months, and this will come back to you. There are other projects, of course, as well. There's a lot of activity. There will be additional divestments, but I really want to stress this and mention this because MunmuBaram remains the biggest value within our portfolio.

We do have a global portfolio that is to a large degree, ready to deliver value, so ready to be divested partially or wholly, depending on market, depending on situation and interest. And a few comments on the portfolio in general is that if you compare our portfolio today with the size of it a year ago, it's quite a lot smaller. And there's a few key reasons for it.

One is that a year ago, the decision by the Swedish government to reject all projects in the Swedish Baltic Sea had not yet been taken. There we had 2 projects where we had actually filed for the permit to the government already, a total of 5 gigawatts that were all rejected. Secondly, we sold 2 pretty big projects down in Italy as well. So there's been a mix of our own actions, divestments and political decisions that have led to a decrease of the portfolio in terms of megawatt. With that said, it's not only megawatt accounts, it's, of course, the maturity of each of the projects as well. So we are continuing to drive projects forward, and they are across the portfolio being matured every day that passes.

If you look at our active ownership, so how much is Hexicon's stake within the portfolio, it remains somewhere around 50%, just over. And this is part of our business model as well is to deliver and develop projects in markets with a local partner. So typically, a 50-50 basis setup is how we initiate and develop projects. Our key focus going forward will be to deliver continued increased maturity within these projects and a focus on divestments. It will not be to expand the portfolio here and now. We certainly have our eyes on suitable markets that will become a floating offshore wind market where a position could be justified at this moment, but our bandwidth does not allow us to stretch out and expand our focus from continuing to mature existing and look at divestments. So let's push for later any expansion of the portfolio, so any plans to add projects to our portfolio.

With that said, if you look down below here, just as an example in terms of maturity stage, as I said, determine the value of a project and expected money to be made from that project by divesting, it is certainly not only megawatt accounts. It is a mix of a lot of things, but how far the projects have gone, how mature it is, plays a key part. And if you look at that, there's 3 projects that are at the late stage of the development phase in our determination, and that's the South Korean project MunmuBaram again, and these are 2 projects in the U.K., Pentland that's in Scotland, and TwinHub down in Southwest of England.

A few significant events over the quarter, just to comment on them. We did announce a press release in September that had 3 parts. One was that we've extended our existing revolving credit facility by 24 months. This is a facility that we put in place quite a while ago with a nominal value of SEK 75 million. It was to support the Nuveen facility, so the development loan agreement, which earmarked money for certain projects that we could also finance anything outside of those projects, including our own overheads. And that we now extended for 24 months, which gives us a lot of room to achieve planned divestments or any other means to, obviously, at the end of the day, also refinance that facility.

Talking about the Nuveen development loan agreement, we've also come to an agreement for an extended tranche within that facility, so an additional up to EUR 4.75 million. And this has also been looked as a way to ensure that we make it all the way through divestments in South Korea. If you were to ask Nuveen, I'm pretty sure that's been their key motivation in this to extend that parent facility, is to ensure that we reach divestments and money back from the MunmuBaram project.

We also signed very exciting an MoU with Wallstreet. So this is part of the Soya Group that also holds Wallenius, a shipping company here in Sweden, which has been a partner for a few years, both in terms of debt financing and owner of Hexicon as well. The purpose of the MoU is for Wallstreet to convert part of their loan into equity, so ownership or co-ownership together with us in our patents. And this is quite exciting, and there's a lot in the planning phase of that now, how we commercialize that technology, which is TwinWind in the years to come. But we certainly think that doing it together with a company like Wallstreet and Wallenius and there not the least fabrication competence across the globe and supply chain skills is something that will complement Hexicon's floating wind competence very, very well.

I would like to mention as well an MoU that we signed with SK oceanplant in South Korea for the MunmuBaram project. That's an MoU with a local fabricator to support us in developing the strategies, time lines, cost base, et cetera, all the necessary components for the fabrication phase. And this is not only as those are critical input for the project, but it's also a fact that in the upcoming auctions, local content matters. So in terms of your scoring and political support locally in Korea, you need to have a certain amount of local content as part of your fabrication scheme. So this is what we're trying to address in the best possible manner together with SK oceanplant.

After the quarter, a quick note as well that one of many -- there are several prerequisites for a project to enter the construction phase and ultimately deliver electrons in South Korea. And one of them, we received the approval of just a few days ago after several years of work, which is the so-called Marine Traffic Safety Examination. So that's how the project and its floating turbines coexists with marine traffic. There are traffic lanes nearby in certain instances, very close to turbines. So you need to address all that with several years of work and surveys, and this was approved just days ago.

A quick note on South Korea as well and the specific project that is MunmuBaram. All in all, it's a 750-megawatt project that holds the prerequisite to participate in upcoming auctions. I mentioned this before, but an update in terms of the market as such. I've talked about the new President that took office in June, and he's already now put together a new ministry. What has come in the news just over the last few weeks as well is that he's now planning for a release probably early next year as to what the next 5-year plan looks like. And this we're fairly hopeful to look at and receive. We've seen so far that everything has done has been a step in the right direction for renewables in the country. So this new 5-year plan, we'll see what it comes out, but it's good that it comes, of course. We need certainty. We need to be able to predict the next -- over the next few years at least look like.

It might not be so that it's a certificate scheme like it is today. It could be something different, and we'll see likely and hopefully quite early next year. Until then, the current renewal portfolio standard that is in place right now will continue, of course, as it is with annual tenders and dedicated pools for floating offshore wind. I mentioned just briefly on the previous slide, the Marine Traffic Safety Examination that we got approved. Otherwise, what's ongoing is very much to prepare the project for auctions and to prepare and engage with external parties, investors for the project.

A word about our technology as well. We've -- and this has been run in parallel to where most of the work so far sits within product development, within the portfolio, but there's been quite some exciting steps that we've taken quite recently as well. And one of them is a so-called integrated load analysis. So this is an integrated engineering work with a commercial turbine supplier, where you look at the motions and engineering and design across the whole system. So your mooring system, floating foundation, tower, turbines, how does it move in different type of weather scenarios? Wind from this side, turbine -- sorry, current here, waves from another angle, looking at different wind speeds, how does it operate? How does it move? Does it withstand the forces? Is it within the maximum accelerations, maximum motions, et cetera, that the turbine supplier stipulates. And we not only do it ourselves, but we do it jointly with a turbine supplier.

And we believe that although there's probably over 70 different floating foundation concepts around the world that we've seen, not that many have gone through this quite in-depth and extensive work together with the turbine supplier. Key results of this is not to say this is what it looks like, design, it's competitive forever. It works for all turbines. It states that there are no red flags so that it works together with a turbine supplier. Thereafter, and from there, you have to optimize, you have to adapt size and other measures for a specific turbine for a specific spot.

In addition to that, what we looked at and developed is a platform controller. So this was developed again together with turbine suppliers and other partners, not only how 1 controls 1 turbine, but in our case, you have 2 turbines next to each other. So they need to know where they are geographically or in space compared to the other one. So this we've developed that is specific a control system for a 2-turbine platform version. And as mentioned, the MoU that we entered with Wallstreet, we're very excited about to take next steps towards the commercialization of our platform together with Wallstreet.

So if we go from here and look into next year, where is our focus? Well, if we do this in 3 areas, start with the projects and our project portfolio developments, it's very much a focus, as I said before, on our core projects. We're not looking at expanding the portfolio, adding new projects to it at this stage. We're focused on 2 things. We're focused on our core projects to continue to maintain their position and value and in parallel, the utmost focus on divestments. We do need new investors and partners into these projects, so to start circulating money that we've invested we're building out this portfolio.

On the technology development side, it's again to a large degree to maintain and ensure that the technology is state-of-the-art, continue to be competitive. In addition to that, we do need on that commercial journey, it needs to be demonstrated. How you do that, when, where, that's something that we'll spend a lot of time, I hope, in the next near term together with Wallstreet as well as part of the IP company that they will co-own together with us. It's all about establishing that route to market and quickly progress along it.

Lastly, when it comes to financing, in a market like this, it's a large degree about securing staying power. We continue to be able to maintain the position of projects until market turns, investors are there ready to invest in our projects, which we're absolutely convinced it will come back. The question is when? But we are already seeing signals that indicates that potentially, if you ask me, 2026 could be that transition year where you go from a weak market back to something a lot more promising.

It's a focus on our operational efficiency. We do need to make sure that we get most out of the money and every penny that is spent, again, a focus on divestment and to establish with a potential combination of divestments and other means, establish sufficient operational runway to get into meaningful divestments.

And with that said, I would very much like to thank you all for listening.

We've received a few questions as well that I will read out myself before answering it. And here's the first one. I've got it in Swedish. I'll read out in Swedish quickly, and then I'll translate it.

[Foreign Language] So basically, are there sufficient conditions for price of energy in South Korea to provide a return on the investments? And government subsidies in South Korea for projects like MunmuBaram in effect?

And the answer is yes to most of those questions. So South Korea has adopted a so-called renewable portfolio standard scheme and certificate scheme within that. So basically, it puts -- the core of it is that it puts an obligation on major power companies need to provide a certain share of their energy production needs to come from renewable sources. If that does not happen, if they don't do that themselves, they are obliged to buy a certain volume of certificates. The government controls how much or how high this obligation is. So basically, they control the demand side of certificates, as well as controlling the supply by granting or awarding new certificates to projects that participate in these offtake auctions. So it's a very lucrative scheme.

And for floating offshore wind, it's perhaps even more of a sweet spot market because in the certificate scheme and the way -- what I mentioned, how it's controlled demand and supply, et cetera, you very much look at the price or value of one certificate. On top of that, projects are received a so-called multiplier. So they receive per megawatt hour more than one certificate, which is decided by distance from shore. So the further you are from the coast, the more certificates you get or the higher this weighting factor and also the deeper the water is.

In MunmuBaram, as an example, we receive around 4.5 certificates per megawatt hour. And this is obviously something that is very attractive for floating wind in particular. And the reasoning from the Korean government is that activities, whether they be shipping lanes or birds or fishing activity or et cetera, they typically go down in intensity or activity with distance from shore. So it's a way by the Korean government to avoid or at least decrease conflicts between offshore wind farms and other stakeholders.

So yes, state subsidies are in place in this certificate scheme. And combining weighting factor and merchant price for electricity, floating wind projects thereabouts where the MunmuBaram project is, so 50, 60 kilometers offshore and beyond, certainly calls for an attractive return on the investment. We're looking at revenues that could be somewhere up towards $350 per megawatt hour. Now the wind speeds aren't as good as they are in the North Sea, but with that price, certainly calls for a good return on investment in South Korea.

I'll go to the next question. [Foreign Language] So in English, does Hexicon have a letter of intent or other agreements with KEPCO regarding floating offshore wind? And to start off with KEPCO is the Korean transmission system operator, so the equivalent of Svenska kraftnät here in Sweden. We do have an agreement, one of the key agreements in the project, actually -- so a binding transmission service agreement, which is basically the grid connection agreement. So that allows and ensures that the project can deliver, transmit all of its electricity into the grid and where it goes into.

So this is, I would say, 1 of 2, 3 really key agreements for any project anywhere in the world, grid capacity is typically a key constraint and a challenge. And it's also very much directly a prerequisite to participate in an offtake auction in South Korea. You need to have 3 things. You need to have your EIA approved, which we got about 2 years ago. You need to have your grid connection agreements, which we have now had for about 1.5 years. And you need in South Korea specifically, you need so-called electricity business licenses, which we've had in place for even longer.

Good. Looking at the next question. In September, Hexicon entered an MoU with Wallstreet to convert part of its loan to a part ownership of Hexicon IP. Is this completed now? Or what is the status?

Very good question. What we announced in September was an MOU, i.e., not a finalized conversion of Wallstreet's loan to co-owned equity of our IP. We've since then worked quite hard because we've identified quite a lot of things that we need to put in place as prerequisites before doing that conversion. This is not anything we do solely by ourselves. We do it very much together with Wallstreet. We have not finalized it yet. We will communicate once that is finalized, and it should not be much longer now. So we will get back to you as soon as that has happened.

Next question. Can you state anything as to the expected timing of an approved permit for your project Mareld in Sweden?

And this is obviously one question that I would love to be able to answer. And the frank answer is no. We don't know. We can just compare and benchmark to other processes. At the moment, we are, as far as we know, 1 of 3 projects offshore in Sweden that are in late-stage determination by the government. And this is how they themselves categorized it. Looking at time lines, we -- it's a very similar time line as to how long ago we applied for these permits compared to the other 2 that are also at this moment defined as late-stage determination.

There have certainly been projects before that, that got the determination sooner or quicker than we now have. But we don't know. There's no maximum timing requirements on the government to make this judgment. What we can state is that we have, which is very, very key in looking towards a positive decision. One, summer last year, we got the support from the County Board regionally investor Götaland. So this is a one step towards a government decision where the County Board regionally recommends to the government either to approve or reject. And in this case, they recommended to approve our project. And secondly, we have more recently also got Natura [indiscernible] -- Natura 2000 permit, which is also a key ingredient for the final permit. But as to the exact timing of when we can expect this, we really don't know.

One final question here I have gotten in is the following. Will the project Pentland in Scotland participate in this year's Contract for Difference in the U.K. What is the timing of that? Has it already happened?

So the Contracts for Difference around this year, so-called allocation round 7 has been open for a few months, and it's been delayed a few times. So I believe that closing is -- if it hasn't been just recently, it's probably any day now or early December. Announcements should be in January by the latest we know. And yes, Pentland is aiming to participate. There is competition, not knowing the full extent of it, we probably expect there to be around 3 projects of similar capacity, all floating wind that participates in this year's allocation round. So very exciting results we look forward to, and they will likely come in January.

That was the final question that I had gotten in. And with that said, thank you very much for listening. Please continue to follow us. There is a lot to look forward to and that will happen in floating offshore wind in the near term. Thank you very much.