Good morning, everybody, and welcome to Hav Group ASA's third quarter financial result presentation. The presentation will be given in the same format as previously. We talk about the Q3 highlights, some about Hav Group in general. I will give a particular business update on each of the segments. Our CFO Pål Aurvåg will speak about the financials. And finally, we sum up with an outlook, and we have a Q&A session, as normally at the end of the presentation. Key developments in the quarter: we have a solid order backlog, especially from Q2, order income of NOK 1.322 million as of 30 September. That was up 118% from last year, and that reflects a very strong order intake in the recent quarters. Just to mention, we had two new battery packages for Norwegian Electric Systems, including a breakthrough in the aquaculture live fish carrier market for that segment.
All the recent contracts are still in a startup phase, and that is also reflected in when we get the income and also the earnings from those projects, so they will start generating income and margins mainly in 2025. The revenue in the quarter was NOK 134.8 million, and we had a negative EBITDA of NOK 24.8 million, and that is, of course, nothing that we are not satisfied with that result, but an explanation behind the result is also that we still experience that the progress in the projects at our customers, at the shipyards, are being postponed or delayed, and that is also reflecting that our deliveries will be postponed, and hence the income and profit. The good thing about that is that it's not lost income. It's moved to next quarter and also out into 2025.
So we feel that we see that this will be an effect that will come back at a later stage. From the subsequent events, we especially got a very good order at Norwegian Electric Systems, close to NOK 100 million, for delivery of energy design integrated automation system and bridge systems for a new build to a field support vessel. As you see here, the order book is still very strong if you compare also to last year, and this will be reflected then also in the growth, especially in 2025 and 2026. Our value proposition is still to add value to our customers by giving them very good technology and good advice in the lifetime of the vessel, and our business segments, technology segments, they are specialists in reducing energy consumption, reducing emissions, and enhancing the competitiveness and profitability of our customers. There are four technology segments.
We have the ship design segment. We have the energy design and smart control segments. We have the hydrogen-based energy system segment, and we have the water treatment system segment. These are the markets and industries that we are focusing on. We still see good activity within offshore wind. Oil and gas is picking up, and they are also looking for more energy-saving solutions and reducing their emissions, and we also see now a very positive trend within aquaculture in Norway, especially where the investments now are coming back after some recession due to various reasons, especially tax reasons here in Norway. When we look at the ship design segment, we have not got any new orders in the quarter. We still have a positive pipeline within the segments that we are working with.
As some of you might remember, we got innovation, or sorry, Enova funding for doing a pre-project of an ammonia-driven live fish carrier, and the company that we are, or the owner that we are cooperating with, have now also applied for funding for realizing full-scale or building this type of vessel with ammonia, so we will see how that goes, so then there's good activity within the markets, and we are expecting also new orders for design, maybe in this part of the year or early next year. For the energy design and smart control system, which, as I have told many times, is maybe the growth potential, biggest growth potential within Hav Group, the order book is still very strong, and also we have got recent orders that are not reflected in the order book, as I told you.
The pipeline there is also very, very good. So they have already a very good foundation for high utility of their capacity, both in 2025 and 2026. With the pipeline, we see that there is the possibility also to continue the growth. For the hydrogen-based energy system, that is a market, of course, that is difficult to predict. There have been signals that the market is becoming more difficult. It's good news in the market. But what we see now, at least still from the Norwegian government, that they are still funding development, trying to develop this market. We also saw from the recent Enova funding for the infrastructure and production of green hydrogen, supporting the shipping market, that this is still a very good prospect for the future. Difficult to say when the market really comes.
Then it's also very good that we are now in this Maris Fiducia project, where we, when Maris Fiducia finalizes the contract with the shipyard, will enter into the contract discussions for delivering five zero-emission pods for this project. Hopefully there will be some news there also, not far from now. For the water treatment systems, the ballast water treatment market has stabilized, so we don't see a huge growth there in the future. We are concentrating now to do both the retrofit market, but also especially now for the new building market for ballast water treatment. Also we will see for the coming years when our installed base is becoming higher, that the aftermarket and the service income from that market will be higher.
There are also regulations in the other market that we are now focusing on, especially for the water treatment system segment, which is land-based aquaculture. As I said, the investments now are starting to pick up again. We see investments also in live fish carriers, where we also have a good market share, and we now also see first breakthroughs for our company. We are expecting that in the very near future for larger installations also for land-based aquaculture. Here you see the order intake segment by segment, and as you see still, the energy design and smart control system is by far the largest, but also ship design has a larger order book than I had at the same time last year.
Water treatment systems is fairly the same, but when we see the orders coming in for the aquaculture market, we expect that the order book will pick up for the future. So then that was the first part of my presentation. Now, Pål Aurvåg, the CFO, will give you some more details about the financials.
Great. If we look into the figures for the quarter, we see that we have a turnover of NOK 134.8 million in the third quarter, with corresponding EBITDA of minus 24.8 million. If we look into the details, the revenue, as I said, is NOK 134.8 million, with a corresponding EBITDA of 24.8, and an EBIT of minus 28.9, net finance 9.9, and net profit and loss, or net loss in a period of minus 19 million. This is an EBIT margin of minus 21.5%. The revenue decline in Q3, corresponding to the quarter last year, is related to lower trading, while the capacity utilization rate is on quite a similar level. Revenue and margin negatively impacted by customers postponing their projects, which had a knock-on effect on delivery schedules of Hav Group in the quarter.
As I said before, recent contract wins are still in startup phase and have not yet started to generate income margins and contributions. The net finance in the period is mostly related to unrealized . If you look into the segments for the third quarter, the operating income in ship design was NOK 55.7 million, with an EBITDA of minus NOK 1.6 million, and a profit before tax of minus NOK 0.4 million. In the water treatment system segment, there was NOK 22.9 million in operating income, EBITDA of minus NOK 2.2 million, and a profit before tax of minus NOK 3.7 million. In energy design and smart control systems segment, the operating income was NOK 69 million, EBITDA of minus NOK 12.3 million, and profit before tax of NOK 5.3 million. In hydrogen-based energy systems, the operating income for the quarter was more or less zero, EBITDA of minus NOK 3.1 million, with a profit before tax of minus NOK 3.4 million.
If you look at the balance sheet, the main changes are related to projects. The current assets increased from NOK 326 million to NOK 589 million at the end of quarter three. Cash and bank deposits decreased by NOK 3.2 million, but the total receivables increased by NOK 245 million from year-end. If we then look at the equity, the total equity has decreased by NOK 48.9 million to NOK 42.3 million per quarter three. This is mainly caused by negative results and purchase of own shares in the period. Moreover, recent startup of several recently won projects has resulted in significantly higher total balance, and this is due to increase in advance payments from customers. This means then that the equity ratio has decreased from 21.3% at year-end to 6.4% per third quarter. This is lower than our loan covenant originally permits.
This underlines that currently equity ratio covenant is not suitable covenant for a company such as Hav Group, which is primarily a project-based business, which means that balance sheet metrics can fluctuate a lot from quarter to quarter. This becomes particularly visible at the start of a growth phase which Hav Group is currently in, where total assets increase sustainably, partly due to advance payments from customers. We have then agreed with DNB that they will waive all financial covenants both for quarter three and quarter four. We will, until the first quarter of 2025 in May, agree new terms that better reflect Hav Group's need when we are in growth phase and a project-based business. In addition, Hav Group has also agreed with DNB that we will strengthen our equity.
And we have entered into an agreement with Havila Holding, our main shareholder, that will guarantee for the purchase of Hav Group's treasury shares at a price of NOK 8.5. And the selling of these shares will strengthen then the Hav Group's equity and also the equity ratio. The total liabilities increased from NOK 336.3 million at year-end to NOK 662 million. And this is mainly related to advanced payment from customers. If we look into the cash flow, the periodic change from Q2 to Q3 is a positive cash flow from operations related to NOK 30.5 million. And this is mainly related to the net change of receivables and payables in the period. There are some negative cash from investments, and this is mainly related to investments in software. And the negative figures from financing is related to repayment of the non-current debt.
Then I will give it back to Gunnar to have the summary and market outlook. Thank you.
Thank you, Pål. You will join us also for the Q&A afterwards, so to sum up and give our perspective of the outlook, we are in the same position that we have been, and our approach to the market and our potential is the same. There are still mega trends, regulations, and also market trends with regards to both looking for environmentally friendly solutions, but not least for solutions that can reduce energy consumption, which is actually the most energy-friendly action you can take. So we are very well positioned, we feel, in still meeting the markets. The recent order intakes that we have had this year really reflects that, and the order intake also will reflect for the future on our growth in activity.
So we see that some markets that we have been very strong in historically, like the oil and gas market, especially offshore support vessels, is coming back. The aquaculture market, both on land and sea, is coming back. And that has already reflected in new orders and is also reflected in a stronger sales pipeline for most of the segments that we are working on. We expect also the subsidiary Norwegian Greentech to they are in the final stage now of the contract negotiations for maybe a breakthrough contract in the land-based aquaculture market. This is a contract around NOK 10 million. And that also signals that the contracts in this market will be significantly higher than the one-off contracts that we have, for instance, for a ballast water treatment system. So this looks very promising from our perspective.
We expect the revenue in 2024 to grow compared to the revenue that we had in 2023. And we also expect a significant growth in 2025 on the back of the order backlog and the recent order that we have had and entered into the last quarters. So we are certainly in a growth phase. And then it's very good that the market is still looking good and also that we have good cooperation with all our partners being suppliers, customers, financiers, and the important stakeholders that have to support our continuous growth. So with that, I sum up our presentation. Our Chief Business Development Officer, Marius Koksvik, is also here. And he will ask the questions that have come in before and during the presentation. And we will try, me and Pål Aurvåg, we'll try to answer to the best of our knowledge. So, Marius, should?
Yes. So we have some questions about the financials here. Are you in control of the financial situation, and do you plan to do any actions going forward?
Yeah, we feel that we are in control of the financial situation to the extent on what we can take control of. As we have said previously, and it's strengthened also in this quarter, especially the development on the projects for our customers, the customers' project. Let's say they are building a ship. When the ship is postponed and the activity is postponed, then also our deliveries are postponed. And that is the part that is difficult for us to control. That particularly hits our results when we, as we have been up till now, not utilizing our full capacity. Next year, the capacity utilization is much higher. So if we then postpone one project, then it's not the big effect as it has when the capacity utilization is lower. Of course, we need to take actions also.
We need to take actions in all that we can improve inside our internal organization, the project execution and everything. We take action regarding fitting the cost level to our activity level. We'll have a very high focus now onwards on taking actions so that the profitability will be shown also in our books as soon as possible. We will not wait to take action, and we will do things so that the negative trend will change as soon as possible.
Do you plan to do any layoffs?
We are in the process of evaluating all our operations, of course. The situation is that we have a low capacity utilization at the moment, but at the same time, we see a very huge growth for next year, particularly in the energy design and smart control system division. So that means that we have a balance of controlling and reducing costs and at the same time being prepared to take the growth that we now see are coming, especially next year. So we have a high focus on that, and as I said, we do the right things in order to turn the trend and becoming profitable again as quickly as possible.
Did you lose money from any projects in the last quarter?
A little bit difficult to understand the question, but as I said, the main reason for losing money in the projects is when the income on the activity is postponed at the customers. So that means that we are losing money in the quarter, but the income and revenue will come back at a later stage when we start delivering again to the same projects. So we don't have big losses except for that in projects at the moment.
What is the reason you are selling treasury shares to Havila?
You want to answer that?
Yeah.
Havila is not. They have guaranteed that they will be sold, and the reason is that, let's say, in discussion with DNB, our main bank facilitator, we agreed to sell them to increase our equity level, so that's the background for the selling of our shares.
Yes, and as Pål said, Havila guaranteed the offtake of the shares. They guarantee the price of minimum NOK 8.50 per share, and also, we will start the process by selling the shares quite quickly now after or in the near future, so more information about the process for selling the treasury shares will come out in not a long time.
Do you think it will be more difficult to win new contracts with these financial results?
We have had a history of very good project financing also through the commercial terms that we have with our customers and with our suppliers. We still have very good relations there. And as a backup for that, we also have a guarantee frame from our bank that can be used if we need to have, let's say, a prepayment guarantee or something. So we have tools to still be in the position of taking the new contracts that we see can come in the pipeline.
Your competitors are growing the revenues. Why isn't the same happening to Hav?
As we say, we expect to grow now in 2024, and we expect a significant growth in 2025. The recent order book put us in a position for a good growth for next year, so we feel that we are also delivering on the promises with regards to growth. You will see that when we are starting reporting more in next year, especially.
The synergies between the subsidiaries that have been talked about, are those being realized?
We are working on realizing synergies all the time. Of course, we have functions that are common to each of the different segments, like financial, HR, and IT, for instance. And there we are getting good synergies. We also see very good synergies in some cooperation projects where more than one of the companies are delivering together. And we are working also to realize more synergies with regards to cooperation, both internally between the companies, but also with the strategic partners outside. So there's still a potential, as far as I see, in realizing even more synergies in Hav.
Are employees offered to buy shares through an employment share purchase program?
Yeah, maybe you can.
Yeah.
We have a yearly share program for our employees. So every year, in July, August, we execute a program every year. So that's running.
What do you think about acquisitions of other companies? Is that put on hold now?
No, it's not put on hold. We are always looking at prospects where we either can consolidate what we are doing or expand into new relevant technology or business areas. Of course, the financial situation puts some limitation on how we can do transactions. But at the same time, we are a stock-listed company. And we have mechanisms on how to do transactions still. So it's, of course, depending on the case. So we are looking, and it might be realized also, but we have no particular projects that we can say more about at the time being.
There are a lot of design contracts being announced now. What is Hav doing to sell more designs?
What we are doing is, of course, we are taking very good care of our existing customers and expect that will pay off also in contracts, not for the far future, and we are working also intensively in the markets that we have identified, for instance, the new oil and gas markets that are coming, subsea, aquaculture, in order also to be a very good competitor and win new customers in those markets, so hopefully, again, that will result in new contracts in the future.
Okay, thank you. That concludes the Q&A.
Thank you very much for following the presentation. Thank you very much also for having such interest in our company. I hope that we can deliver better even on our promises for the future. We think that the future looks bright with regards to the order backlog that we have and the pipeline. But it's up to us to prove. So thank you for following us and looking forward to seeing you at the presentation, if not before, next quarter when we present the Q4 2024 results.
Thank you.