Ladies and gentlemen, good morning and very much welcome to the Q4 presentation of AKVA Group. The agenda for this morning is that I will do the highlights and the outlook first, Ronny Meinkøhn, the CFO, will do the financial performance. Afterwards, we will do a Q&A session. For those following us virtually, please post any questions during the presentation and our moderator will read the questions during the Q&A. Let's go straight to the highlights for Q4. We had a record high sea-based order intake of NOK 823 million. I have to say that I'm really pleased with that in light of the new proposed resource rent tax, which came 28th of September.
This was the first full quarter we had a test period to see whether the market was working as normal. What is behind 823 is very much income from the Norwegian marketplace. That was very good and very important to see that core products, now I'm talking core products within sea-based, is working as per normal. Secondly, we also announced a few days ago that we were awarded a new RAS contract for NOAP, the project in China for a phase II, 4,000 ton. The estimated contract value from that is EUR 40 million. The market for our post-smolt project in Norway is still on hold when it comes to signing new contracts, which is due to the resource tax.
We did see acceptable profitability within sea-based and digital, but still, unacceptable and challenging margins within land-based. 70% of our cost saving program of NOK 100 million is implemented by end of the year. Revenue for the quarter came in at NOK 779 million, which is somewhat down from a year before, and EBITDA at disappointing NOK 27 million. If you break down the NOK 27 million into segments, you can see sea-based with NOK 49.7 million, at the same level as the year before, NOK 49.4 million. Digital at NOK 4.7 million, a double of, almost double of the year before, NOK 2.8 million, whereby land-based is, of course, the drag here with the minus NOK 27 million for the quarter. There are three problems there.
First, as we have been explaining before, we still have a path of the current project portfolio being executed on historical old contracts at fixed prices. That is something we fixed two years ago with regards to going into new contracts, but we still are delivering on legacy contracts. That's issue number one. Issue number two is one particular post-smolt project which has been very unfavorable for us, which we ended in Q4. The third one is that for the quarter, we are still higher on OpEx versus activity. Those are the 3 negative drivers. With regards to the full year, the turnover came in at almost NOK 3.4 billion, NOK 3, 376 million.
EBITDA at NOK 158, and EBIT for the year NOK 56. If we then also break down to segments, for EBITDA, sea-based NOK 262 for the year versus NOK 283 a year before. Digital NOK 23 versus NOK 14 a year before, whereby land-based has been subject to a lot of issues and restructuring, minus NOK 127, which is the root of the issue. Moving on to order intake. I said that I was very pleased to see that order intake for sea-based was on a good level. NOK 823 is actually a record quarter for us over the years. Once again, the fact that that came right after the announcement of the resource rent tax is somewhat comforting.
Here we are talking about our traditional core AKVA products. It's barges, it's pens, it's nets, feeding equipment, cameras, et cetera, et cetera. That is working as normal. Actually Norway is the driver behind. Order backlog after a bit too low level for sea-based in Q3, we are back to a normal acceptable level by end of the year. With regards to land-based, this is by end of Q4, so certainly before the NOAP contract were announced on early February. The value of that is EUR 40 million or around NOK 440 million.
If you consider the NOAP contract, the order backlog for land-based is now NOK 1.1 billion. With regards to the cost announced cost saving program, which we announced for Q3, we have a cost saving target overall of 100 million NOK. 70% of that is implemented and will have a positive effect as of first of first, whereby the remaining 30% will be implemented during 2023. Headcount reduction will end at 130. The cost provision of 98 million NOK was already charged to the P&L by end of Q3. Actually, this is progressing as per planned. I just want to rehearse quickly the restructuring we are doing.
This is basically a repeat of what we talked about in Q3, but since it's a rather fundamental thing, I just want to repeat what we are doing and some comment on what is going on here. First of all, of course, the financial performance of land-based is below expectation and not acceptable, that goes without saying. We did a lot of work in the second half of the year to establish new principles and what we call our new blueprint organization, which actually will be established at our headquarter outside Stavanger. Also recruitment campaigns have been initiated and we are hiring new people there.
We have relatively speaking, good access to talents in that region, whether we talk about engineering resources, also we get some people with relevant aquacultural experience, not all of them, but a critical mass of them. So that is the advantage of building up in that region. Also we have proximity to the rest of AKVA Group as well. And we will do a gradual downscaling of the organization in Denmark, also due to high turnover of personnel in first half last year. However, we will still have some meaningful size back in Denmark, in particular related to design and engineering. So the new organization will then be located where the main marketplace is for post-smolt, which is Norway.
With proximity in the same building as AKVA Group management, sea-based, and the digital organization. There is good. It's very meaningful to bring it together. Digital and land-based is coming together and there is also quite some good synergy between the different innovations agenda. We have just extended our head office with 2,000 square meters. We have space for building this center of excellence in that place. Already everything related to the commercial related to land-based is already moved over.
All new contracts, supply chain, the strategic agenda, the innovation agenda, all that is done from the office next to ourself. Also we have done a so-called right sizing and restructuring of our organization at Sumner to go back to just focusing on products like fish tanks and fish handling. On the cost side of it, we have a target of NOK 62 million, where 50% were executed during Q4 2022, and the last 50% during this year. In essence, we are actually building a new company on the basis of the proven RAS technology, which is already developed over the years. That's what we are doing. AKVA implication of the new resource tax.
Well, that's a moving target these days, so it's a bit hard to comment. However, if the first statement is with regards to activity level, is that on sea-based, at least, based on the experience we did see in Q4, we see a normalized activity level because the standard and the core AKVA products within sea-based is supporting core operation in the sea. That is still, of course, a very meaningful thing to do for all our customers and the salmon farmers in Norway. That's number one. Number two is that with regards to Postsmolt, we consider that market as a kind of on hold for time being.
In particular, there are a lot of activities going on with regards to pre-projects, with regards to bring it up to approval level for the various companies and their boards. We do not expect hard contracts or signing of new deals within the post-smolt segment in Norway before we have seen clarity on the resource rent tax issue. That's the guidance from our side. We don't know any more than anybody else. The proposition will be issued in March. That is set by the government. The voting about this proposition will take place likely in June. We will have a new normal, whatever that is gonna look like, and then we will like to see.
That's basically what I wanted to say about the resource tax. Just at high level, how we see this market, we have updated our 2030 view, and it is somewhat downgraded from what we used to talk about with a potential of 4.6 million. We are now talking about a max potential of something like 4.2. If you look in the back mirror, last 10 years from 2012 to 2022, the total supply came up with close to 1 million tons, 0.9, which is a CAGR of 3.7% in the last 10 years window.
Then with the demand supply of let's say close to 5%, you can calculate to 4.2, that's a bit theoretical because we think what you should look at is the dark line here, which is the expected supply development of approx or probably max 3% CAGR a year. Which will bring you to 3.6. Then we have just on a more generic way, we have some comments on what are driving supply here. First of all, on the slight positive side, we think there could be technological advances or innovations to improve utilization of existing licenses. One clear example is of course a post-smolt strategy for our company.
We have different modeling there depending on what size of the post-smolt. If you go to something like 800 gram to 1 kilo, depending where you are in Norway, which farming region, 30% is very feasible to get as a license growth or growth under your current licenses if you apply a post-smolt strategy. That is one example. We also very much believe in deep farming. I will give some more detailed update in a few minutes, but that could also in practice drive growth.
As a matter of fact, like you guys, we see slow uptake and scale up of new farming technologies, both on the land-based side and the offshore side, which is even lacking final regulations, et cetera, et cetera. If you take the window for until 2025, there will not be any significant volume from new technologies. A window from 2025 to 2030, there could be some, but fair less than everybody or including myself and we self-thought a couple of years ago. Probably proof of concept within RAS on-growing could be there one year later on. That's what we believe.
The headwind or the drivers putting pressure on the volume growth is everything related to regulations, political headwinds, which is actually there to a big extent in many of the marketplaces. I just came out of Chile. I visited Chile one week in January, and there is a lot of political headwind in Chile as well. One example is even a new they want to rewrite the entire aquaculture law and there is a lot of uncertainty what that's gonna lead to. We are aware of the issues in BC, and also if you go bottom right here, the Norwegian resource tax, there will be some level of resource tax, we know that.
That will also bring down investment in innovation and new technology. The supply picture is a bit complicated, but there will really not be a lot of growth in the years to come. That really calls for a very strong salmon price, as you know. Okay, this has been our innovation agenda for land-based over the last two years, is still the same. Just one update on box number two, we are making good progress on our development projects with regards to everything outside the core RAS.
The core RAS technology is very much developed over the years, we also want to be a complete supplier for everything it takes to run such a facility, like the feeding, the fish tanks, fish handling, et cetera, et cetera. Our newly developed feeding solution is part of phase I from NOAP and also phase II of NOAP. That is something we are now commercializing, we will move on with other commercial launches as well. Post-smolt and the RAS concept there, we will say very clearly is very much validated. Proof of concept is there. In the last couple of years, we have done three major projects in Norway. It's Tytlandsvik, we have been talking quite about that.
They have very good results, both in the facility itself, but also more importantly, what is happening with the fish in the sea. I'm not gonna repeat those biological results, but they are superb. Also, Svarberg and Ænes is projects we have been completed in the last couple of years. I think there is a consensus in the marketplace that the post-smolt project or concept is proven, but you need to do it right, of course. We still expect a lot from this segment. Even though there is a standstill now because of the resource tax, we still believe that we will enter into new contracts after the summer and in the years to come.
We firmly believe in that. That's also why we are keeping up with higher capacity, more people than we need for the current to man-manage current projects. Also there important to mention that despite the resource rent tax, we are working our sales pipeline. The number of prospects is better than before. Much more solid than ever before. There is a lot of interest for post-smolt. Of course, I do not expect to sign contracts before after the summer, but we are working on eight to 10 projects in Norway, that's way more than we ever did before. I think this will really happen when we have a new normal.
This is our innovation agenda for sea-based. To the left, you can see our traditional core products. That is what is behind the order intake of NOK 823 for the Q4. We are constantly working on improving and innovating within our core. I will comment digital in a minute, and also deep farming, I will go to a special slide for that one. We have three different solutions for farming fish in the deep. In the deep, we mean at least 20 meter below the surface, which is typically or normally under the sea lice belt. That's Nautilus, Tubenet, and Atlantis.
In particular, Nautilus and still Tubenet has traction in the marketplace. Some of the context here is that we have seen excellent biological results with the farmer in the mid of Norway, Sinkaberg-Hansen. They harvested fish last fall, which had been in the deep all the way in more than 400 days. That fish was without any sea lice treatment. That is not one small trial. This is commercial production over several sites. That has been a little kind of trigger for other farmers to look into this. We just had a webinar on deep farming, and as many as 400 people followed that webinar.
Of course, a lot of analysts, investors, and consultants, also a long list with customers. Over the last couple of months, we have now signed four contracts, which should be regarded as pilots, with 3 of them are some of the large farmers in Norway and one medium ones. The typical development here is that everybody. This is a rather new way of farming fish. It comes with more operational protocols. There are different things you need to do differently and it can be more challenging to do the farming. It also comes with a big benefit, of course, and that's you can avoid the sea lice treatment.
That's the big reward there or benefit there. But the typical process is that maybe a big farmer saying, "Okay, we want to test this on one site," and then they want to run the site to harvest. If they can repeat the same kind of results as, for instance, Sinkaberg, they will scale up. What I'm saying here is that we have good traction. We have already four customers testing. We have eight to 10 we are in dialogue with. I expect that if everybody or if other farmers will repeat what Sinkaberg has been doing, we will see a good scale up there, probably in 2024, because there are lead time here.
If you are gonna produce a cycle, it takes its time. Right. Okay. Then, just quickly about our current digital solutions. First, AKVA observe, which is about automated feeding. We are using advanced AI technology, artificial intelligence, and also self-learning in order to automate completely the feeding. This is already installed in 54 sites in the world and we had 25 sites, or new sites, during 2022. This is based on a recurring business model. fishtalk, you probably know there we have a global market share of 60%. We are investing quite a lot in fishtalk in order to be in front of development.
fishtalk is the base, the ERP system it takes for a farmer to do the farming. AKVA connect, which is about bringing together software and hardware, the steering system. There we have now 167 sites on a recurring revenue model and 125 during 2022. A lot happened during the year. What does this mean financially? Okay. Full year revenue 2022 came in at NOK 96 million, which was up 30% from the year before at NOK 73 million. EBITDA came in at NOK 23 million for the year, which was up from NOK 14 million or 60% up. Still from a low starting point, but this is a business which is scalable. We have already invested.
We have the cost base it takes to scale up to a much, much higher level. Everything which will be added now is gonna be, relatively speaking, very profitable because the cost is already there and it's a scalable business. My expectation is that the scaling of this business will happen over the next couple of years. That brings me very much to the to my final slide, which is our medium-term target for... That is the target we have installed for 2024, of NOK 4 billion in revenue. Also with the profitability level of 8% and ROIC of 15%.
Of course, one important disclaimer there is that we need to see a new normal for the post-smolt market in Norway, and be able to sign contracts in the second half, in order to reach the NOK 4 billion. That one we still believe will happen, and that's why we are still behind this target. Right. Okay. That's that brings me to the end, and I'd like to hand over to Ronny. Please, Ronny.
Thank you, Knut. Okay. I will give you some more details on the financial performance during the quarter and also on the financial position to the company at that year-end. Sorry. Yeah. I will start with the consolidated income statement, both for the quarter and the full year of 2022. The revenue came in at NOK 779 million. That's NOK 53 million below Q4 last year. The reduction is all related to the sea-based business. As we discussed during the Q3 presentation, we had a somewhat low order intake in sea-based in Q3, and that's partly affected the revenue level in Q4. We are very pleased that this drop in order intake in Q3 was temporary, as we could report a record high order intake in sea-based now in Q4.
For the totally of the full year, the revenue came in at NOK 3.4 billion. That's NOK 250 million above 2021. That's 8% increase. However, if we exclude the revenue from the aquamarine service business in 2021, that's NOK 70 million, and also take into consideration the loss of the Russian market in 2022, on a like for like basis, we have an increase in revenue of 14% in 2022. The profitability in the quarter is of course poor. EBITDA of NOK 27 million and EBIT negative of NOK 14 million. That's NOK 33 million below Q4 last year. As Knut explained, and the lower profitability that's related to the high cost base in land-based, also some challenging project margins, including closing of one particular unfavorable project during the quarter.
Also the profitability for the full year is of course very disappointing with a negative EBIT of NOK 56 million. We reported the restructuring provisions in Q3, the NOK 98 million, and also during the first half year we reported NOK 67 million related to high cost inflations and also the NOK 65 million on one-time provisions on certain land-based and sea-based projects. We report the record high revenue levels both in Q2 and Q3 last year. In Q4, the revenue came down by 6%, partly due to this temporary drop in order intake levels in sea-based in Q3. The book-to-bill ratio, that's again about 100%, which of course is very important for us, and a strong order intake in sea-based in Q4 should indicate a decent activity level start of this year, 2023.
Looking at the markets, comparing Q4 2022 with Q4 2021, we see that the reduced activity level, that's mainly related to the Nordic market with a reduction of 15% or NOK 71 million. Europe, Middle East, it was reduced by 18%. That's all related to the situation in Russia, while we still have this positive momentum in Americas with increase in revenue of 24% quarter on quarter. Looking at the segments, the sea-based is still the main part of our revenue, 76%. The sea-based revenue decreased by 9% quarter on quarter, and we see still this positive development in digital with an increase in revenue of 14% compared to Q4 last year.
The financial performance is slow, it's poor, due to the high cost base in land-based compared with the current activity level and also the lower profit margins from some of the ongoing projects. I will comment a bit more on this when we talk specific about land-based later in my presentation. EBITDA ended at NOK 27 million while EBIT ended at minus NOK 14 million in the quarter. That's NOK 33 million below last year. Taking into account the reduced activity level in sea-based compared to Q4 last year, we think the profitability is acceptable both in sea-based and in digital in Q4.
With regards to the cost-saving programs, we have achieved what we promised, that the 70%, the NOK 70 million of the total target of NOK 100 million by the end of Q4. This had very limited impact on the numbers in Q4, but will improve the profitability in Q1 and onwards this year. On a financial position, we consider the poor financial performance in Q4. We are pleased with the situation regarding available cash. Was a reduction of NOK 58 million in the quarter. At the end of the quarter, we had NOK 735 million in available cash, which also includes the available credit facilities with DNB.
We are very satisfied that we managed to keep the low net working capital levels from Q3, so we ended at 6% in Q4. Looking back in the mirror, this is a very low level compared to the history. We have implemented several initiatives, improvement initiatives to reduce our net working capital, and we are starting to see effects from several of these initiatives. Inventory levels is one example. We had an increase close to NOK 100 million during the first half year, and then looking at the second half year, we managed to reduce inventory levels by NOK 50 million. However, we still expect some challenging supply chain situations, so you should also expect some fluctuations on the net working capital going forward.
Also, we informed you during our Q3 presentation that we received a waiver from DNB on the covenant. The EBITDA we used to calculate this covenant is adjusted for non-recurring costs of NOK 138 million in agreement with DNB. Due to the slow financial performance in Q4 and also the increase in net interest-bearing debt of NOK 94 million, the covenant increased from 2.71 to 3.33 in Q4. Still a comfortable headroom compared to the threshold of 4.5.
The increase in net interest-bearing debt, that's mainly related to ordinary CapEx activities in the quarter of NOK 44 million and also new IFRS 16 liability, NOK 34 million, where the main part of this increase is related to the extension of the office lease at our headquarters, as Knut mentioned. For the full year of 2022, we have an increase in net interest-bearing debt of NOK 54 million, and we are satisfied that we have managed to increase or improve the cash flow in our projects and also at our production facilities and achieved a reduction in net working capital close to NOK 160 million during the year. On CapEx, NOK 44 million in the quarter, where we classify 33 out of the 44 as growth initiatives.
The main part of the NOK 33 million, NOK 26 million, that's related to investments in our three innovation agendas, one for sea-based, one for land-based, and one for digital. Full year CapEx, that's NOK 168 million, where close to 75% is related to growth initiatives. Of course, due to the slow financial performance, it's does not make much sense to talk about the current return on capital employed. As Knut told you, we still believe in our medium-term target of 15% by the end of 2024. Also, I need to repeat the same message.
An important assumption to this is that post-smolt market is not significant postponed because that's an important part of our organic growth strategy for land-based. Due to this slow financial performance, we the company decided not to pay any dividend for the first half year of 2023, and we will make a new assessment for the second half year as a part of our Q2 preparations. Some more details on the financial performance in the various business segments during Q4, starting with sea-based. Overall revenue decreased by 9%, and the reduction is mainly in the Nordic region. We had this high order intake, NOK 823 million. That's an increase of 18% compared to Q4 last year.
EBITDA margin of 8.4% compared to 7.6% last year. We think this is acceptable considering a revenue level of NOK 590 million. Please note that this business is scalable. We have more or less a fixed overhead cost base, so meaning that an additional NOK 60 million in revenue, the same level, the NOK 50 million level we had last year, would have an EBITDA impact of NOK 12 million-NOK 15 million, and then an overall EBITDA margin closer to 10%. The Nordic region experienced reduced revenue of 18% in the quarter. On the positive side, we had a strong increase in order intake of 43% quarter on quarter.
In the region of Americas, revenue increased by 26%, and we also have a positive development in order intake with plus 17%. Europe, Middle East, the reduced revenue, that's related to the situation in Russia, as already mentioned. The order intake reduction, that's mainly related to our business in Turkey, which had a very strong Q4 last year. The market is still strong in Turkey, so this is more about timing. The 12-months trend, both on revenue and order intake, illustrates what we just talked about. The drop in revenue in Q4 is linked to the lower order intake in Q3. As you can see, we are back on track again in Q4, and the order backlog of NOK 902 million, that's NOK 50 million higher than a year ago.
On the recurring revenue, the OpEx-based revenue, a positive development during the quarter. In total, it represented 39.2% of the total sea-based revenue. That's NOK 28 million higher than Q4 2021, which is an increase of 14%. There is high activity during the quarter on all the service stations in Norway, with a 10% higher revenue compared to last year. Land-based technology. The order intake is NOK 34 million in the quarter, compared to NOK 21 million last year. The newly announced RAS contract with NOAP, the EUR 40 million contract, is of course very positive and welcomed and will be added to the order backlog in Q1 this year.
The revenue in the quarter was more or less at the same level as in Q4 2021. The poor financial performance is with a negative EBITDA of NOK 27 million in Q4. First, we have discussed and mentioned the current activity level, which is too low compared to the current cost base, the number of employees in the land-based organization. We ramped up the land-based organization significantly from Q1, Q2 2021 to Q2 2022 to take our share in the full grow-out market and also the increasing market in the post-smolt in Norway. As you know, financing of new full grow projects has been difficult for the time being, and also the announced resource rent tax has put investments on hold in Norway.
The consequence is that we have a too high cost base compared to the current activity level, and we have taken measures. As reported, we have achieved the 50% cost saving target for land-based, approximately NOK 30 million in annual cost savings. That's achieved by the end of Q4. The remaining 50%, NOK 30 million, is to be achieved gradually during this year. The second part, that's a significant part of the revenue in the quarter, is related to projects with lower profit margins, including closing of one unfavorable project in the quarter.
Of the order backlog, the NOK 682, approximately 40% of this order backlog, that's related to older contracts, older contracts without the mechanism for price escalation, meaning that we are not allowed to pass on cost increases to customers. As you remember from Q2 and Q3 last year, we wrote down the project margins quite significantly in this portfolio. And the rest, the remaining part of this revenue of the projects will be completed during 2023. We have the other part of the order backlog, the 60%, which is based on contracts entered into 2021, 2022, with mechanism for price escalation, and they have also normal profit margins in the quarter. In summary, we expect gradually improved profitability in land-based going forward.
We have completed part one of the cost saving program. Secondly, the effect we have from the old contracts without price regulation mechanism will be less going forward, but will still influence on the 2023 financial performance. On the trending for order intake and revenue, we see a positive development, but it has leveled off the last quarters. The newly announced contract with Nordic Aqua Partners will of course contribute, but the final outcome of the resource tax will maybe have a big impact on how this development will be going forward. Last about digital, we have a steady and positive development in digital.
We have a revenue increase of 14% this quarter compared to last quarter, and a decent EBITDA margin of 19.7%. We have a strong increase in the revenue overall for the business segment during 2022, and the margin, EBITDA margin increased from 19.4 in 2021 to 24% in 2022. The 12 months rolling, both order intake and revenue, it confirms the positive momentum we have in the digital business area. As Knut presented, we achieved important milestones with regards to new sales in 2022, and we will for sure continue to invest in our digital capabilities to support further growth for this business area. Okay, thank you. Knut will now continue with the outlook.
Okay, thank you. Thank you, Ronny. Just to conclude the presentation is that the order backlog is sound and forms a good foundation to execute our strategy, also taking into account the newly entered into contract with Nuuk. Salmon prices expected to remain strong, driven by reduced supply, so meaning that the customers, they will absolutely have a cash flow to support the core business and activity even regardless the resource tax. The implication from this proposed new resource tax is of course uncertain.
We have said what we believe with regards to timing, which is in line with consensus and so far so good with regards to the sea-based market that is still working as normal. Post-smolt market, everything is kind of on hold for time being. Okay, we also retain our medium financial term, sorry, target with a minimum of NOK 4 billion turnover in 2024 and corresponding EBIT margin of 8%. Our annual cost saving program of NOK 100 million is being implemented, whereby 30% of it will be implemented during 2023. Certainly we believe in the future, both for sea-based, land-based and digital.
We are not changing anything with regards to our investments and our innovation agenda. That is still full steam ahead. I think we leave it there and let's start with the Q&A. Any questions from the audience? Let's start there.
Hi. Thank you. Sandra from Pareto here. I was just wondering, I think you mentioned it, but how much of the total backlog is on, call it, legacy fixed price contracts, and what's the total lead time on those?
Yeah. Okay. On sea-based, everything should be normal...
Yeah
if I can put it that way, I mean, nor-normalized margins. There is nothing to talk about with regards to sea-based. Of course not digital either, but there are a few things to talk about with regards to land-based. If you look at the order balance as per order backlog as per end of year was NOK 682.
What we are saying is that 40% of the NOK 682, is what we said old contracts with fixed prices without price escalation. All the 40% of the NOK 682 will be concluded in 2023.
Okay.
The 60% has been is projects which is entered into in the last two years, during 2021 and 2022. We changed our contract principles and terms as of 2021, so they should be perfectly normal. Also, of course, the new Nuuk contract, the phase I Nuuk contract is part of the 40%, if you understand.
Yeah.
That's a, that's a legacy contract entered into all the way back 2018. That's a fixed price contract. The new contract is of course on very different terms. That's more the nature of a cost plus with some target price mechanism and full price escalation. The new contract is a very different animal. What we are saying now, the NOK 682 million plus the NOK 440 million, that's NOK 1.1 billion. We have something to still wash through in 2023. And that will, that will hamper the gross margin somewhat. We have earlier said that the phase I Nuuk contract is low single-digit gross margin, whereby it should be in the mid-20s.
That's the impact of the 40% to give some visibility on it.
Got it.
That means that and then some more guidance there. We expect the activity level for 2023 to be in the line of 2021 and 2022. 2021 we had roughly NOK 500 in turnover and last year around NOK 590. You correct me if I say something wrong.
Yeah. No, that's fine.
We will probably be in between for 2023. It's still a too low activity level. We still have some higher cost because we are not done with all the restructuring and we have some impact from old contracts in 2023, the 40% of the 682. Meaning that if you translate that into 2024, we have NOK 600 million to talk about as activity-based, plus whatever we secure during this year. We will have a fresh cost base or restructure cost base and we will have good margins. The trouble with this business is that if you have a wrong contract, you are suffering for let's say three years typically.
It's not a quick fix. We think we are really turning the page now, and we are looking ahead.
Got it. Very clear. Thank you.
It was a long answer- but I just want-
Quick question here. Hi, Carl Mitreto. There is a lot of talk about some new not only new licenses in Norway, the so-called milieu technology, can you say something about how you are positioning yourself towards that? Are you doing anything with, let's say, real closed systems in the sea?
We currently don't have a real innovation agenda for closed system. What we are doing, we are monitoring other emerging technologies. We see that as still a slow development in order to have breakthrough and it really costs a lot of money to run that innovation agenda. We have been mapping somewhere between 25 and 30 different innovation projects, either semi or fully closed and we think quite a number of those projects will have some headwind with regards to financing following the resource tax. We are more, we are more studying what's going on.
We still truly believe in more kind of simple technologies like deep water. We really see nice and good results from that, and that is our focus. We also really believe that all kind of technologies, also simple technologies, which can bring down the sea lice problem, should be part of the definition with regards to what you are talking about. We had several discussions with the politicians in order to try to understand their line of thinking. We're not certain about where this is going yet.
We have a strong view that also simple focused technologies very pretty easily scalable should be part of the scope.
Thank you.
Yeah. Ola Trovatn, DNB Markets. To pick up on the land-based contract, if I understand it correctly, you have a price escalation, but will it also be price de-escalation if commodity prices decline? How are you addressing FX in all of this? Is that hedged or?
Yeah. FX is back to back. We are.
No, no currency risk.
No currency risk.
Yeah.
No currency risk. That's simple way of saying.
Yeah.
All right. If you see a price the contracts are neutral on price so there are price escalation and the other way around as well. It's back to back on the price mechanism.
Yeah. Perfect. On deep farming, can you sort of comment on what you see as market potential in 2024 or is it still early days?
I don't have a target to disclose but I can just explain, with Sinkaberg we have now I think it's close to 30 cages delivered, at least in the high 20s. So that is... They are a medium-sized farmer. Now we have three out of the five biggest, they are running pilots with us. If they are scaling on this one, it will be a huge number of cages. Then you will talk about more than 100 cages into next year. The potential is great.
Yeah. Perfect. Can you comment on how much more expensive a deep farming site is compared to conventional sites?
It is, it is more expensive. We also expect to have more value creation from those type of sites. We know the-- we don't, sorry, we cannot disclose, details because we know, competition is watching us closely and we are the only listed company. Sorry for that but we cannot-
Yeah.
We cannot disclose the profit margins.
Yeah. That's good. Can you comment on, sort of development in Norway in Q1 on sea-based, given the resource tax? Has it been the same development as Q4 or, increase or decrease?
No, we will only comment Q1 when we report Q1, sorry.
Yeah. Perfect. Last from me. You spend quite some numbers on R&D, NOK 26 million in Q4 and maybe around NOK 100 million in 2022. Are you sure or comfortable that, those spendings are meeting your, return requirements internally?
Is it 100 million NOK, correct?
Yeah. Ballpark.
Ballpark. Okay. We break it into three. We have our digital innovation agenda which takes a bit more than one third, and then we have sea-based and land-based. We are-- Of course we are very comfortable that this is a meaningful investment. What is behind it is the engine of digital, land-based, and also sea-based. Yes, we expect good returns on those investments certainly.
Yeah. Perfect. Thank you.
Any other questions from the audience? Is there anyone from the call? Okay, we will read a few questions from the call.
I guess there is a big interest for the resource rent tax. In your view, what has to change in the resource rent tax suggestion to make post-smolt projects attractive for salmon farmers? That is a question from Nils Thommessen .
We think that the resource tax will only be for the sea phase, for the sea operation and not subject to any land operation at all. That's the starting point. Other than that, we just repeat what is the consensus from the industry that the level of the resource tax should be brought on in order to make sure that there is ample free cash flow from the industry to support the future to do innovations and secure growth.
Good. I don't think we have any further questions.
Anybody from the room? Okay. If not, I just want to say thank you very much for the meeting, I wish you a nice weekend. Thank you very much.
Thank you. Thank you.