I am Tor Olav Gabrielsen. I'm the Executive Chairman of M Vest Water. Together with our CFO, Morten Hilton Thomassen, I will provide you with the latest updates on our business activities and financial performance. Please note that this meeting is being recorded, and the replay will be available on our website later today. Also, keep in mind that this presentation contains forward-looking information based on management assumptions and analysis. A full disclaimer is included at the end of this presentation. This is the agenda for today. We start with an overview of the most recent highlights, followed by a brief introduction of our company. We will then provide a status update on our business activities and financials before summarizing the key takeaways.
After the presentation, we will have a Q&A session, and we will invite you to use the Zoom chat function to submit your questions. We are pleased to announce that during the last period, we have been awarded contracts from global leaders in the aquaculture and oil and gas industry. In the aquaculture segment, we got a contract award from a global leader in the industry to upgrade our water treatment solution for a salmon slaughterhouse. This strengthens our position as the market leader in this field. Also, Saudi Aramco has decided to pilot our NORWAFLOC and NORWAPOL technology at Safaniya, the largest offshore oil field in the world.
I would also like to mention that in the first quarter, we expanded our agent network in the Middle East by entering into an exclusive agent agreement with the Invest Support Company for market penetration in Qatar, Bahrain, Oman, Dubai, and the Emirates, and we are currently working with several opportunities in these countries. Regarding our operation in Germany, we have started the implementation of NORWAFLOC in municipal dredging and sand and gravel washing operations. Additionally, we signed a long-term frame and cooperation agreement with VerdeVision GmbH for the delivery of NORWAFLOC in agricultural manure recycling operations. Overall, the last period saw positive developments across all our key segments, resulting in an increased order intake and a significant growth compared to the first quarter of 2024. M Vest Water is a developer of green and biodegradable products for water and wastewater treatment, helping industries solving water pollution challenges.
Our two main products, the NORWAFLOC, are green and biodegradable chemical, and NORWAPOL, a high-performance filtration technology. In addition to these products, M Vest Water provides equipment and solutions offering both chemical and technical expertise to our clients. We have established facilities in Norway and Germany, and we also operate in the U.S. and the Middle East through partnerships and agent agreements. Our current baseline represents a robust and strong platform, perfectly positioned for growth in global markets and the creation of shareholder returns. With a solid foundation in place, we are strategically equipped to seize emerging opportunities within the megatrend of clean water as both a resource and a commodity. In the last period, we had positive developments across all our key segments, proving that we have a solid commercial platform.
This is supported by an established footprint in Germany within dredging, sand and gravel, and municipal markets, a large and growing tender portfolio in the Middle East oil and gas markets, and strong industry partners and reputable agents, and we are a provider of the best available technology to the aquaculture industry. Last but not the least, the markets we operate in are huge and global, constantly seeking new and sustainable solutions due to regulatory pressures and an improved cost benefit in improving the water treatment process. Going into the next period, we have a strong baseline that not only supports our expansion initiatives but also ensures that we remain focused on maximizing shareholder returns. By leveraging our strength and maintaining disciplined execution, we are confident in our ability to deliver consistent long-term value for all stakeholders.
M Vest Water's mission is to innovate eco-friendly water treatment solutions to minimize hazardous chemical impact and to support a circular economy. More than 80% of the world's wastewater flows back into the environment without any water treatment, and about 1-3 million tons of nano and microplastics are released into nature annually. Our contribution is to offer eco-friendly water treatment solutions, replacing microplastic-based chemicals and enabling the sustainable reuse of valuable sludge. The global water treatment chemical market is expected to reach $50 billion by the end of 2028. M Vest Water targets multi-billion dollar industries that are global, in high demand, and are experiencing a solid annual growth. Our main targeted industries are oil and gas, aquaculture, municipal wastewater, and dredging.
The common denominator for these industries is that they consume large amounts of water and require water purification to reduce emissions to nature, as well as sludge treatment to ensure reuse and prevent further littering. The world is facing a water crisis where climate change, urbanization, and increasing competition for water sources are worsening with each passing year. For large and emerging markets such as oil and gas, dredging action is needed, both from regulatory bodies and individual market players. For the oil and gas industry, our technology addresses critical issues like depletion of water reserves and the issue of contamination. Most of the world's groundwater reservoirs are on track to run dry, and synthetic chemicals continue to be widely used. In Germany, regulatory changes state zero tolerance for synthetic chemicals.
M Vest Water, together with VEBIRO, are proud to be the first suppliers to introduce 100% natural products to the dredging industry. Growing our tender portfolio has been a top priority. It is rewarding to see how our efforts to convert leads and opportunities into tenders and contracts have paid off. Compared to the first quarter of last year, the number of contracts and the participation in tenders have increased significantly. I'm very satisfied with the collaboration with our agent, Energy Support Trading, which has accelerated the qualification process, allowing us to submit tenders to major oil and gas operators in the Middle East region. Looking ahead, we expect an increasing number of these tenders to convert into contracts and paying customers over the next quarters. Now, let's move on to the business updates, starting with the aquaculture industry.
By the end of the first quarter, it has been one year since the first Norwegian salmon slaughterhouse implemented our NORWAFLOC and water purification solutions to meet the new environmental discharge regulations. Today, we supply three salmon slaughterhouses with our eco-friendly chemicals. We are committed to continuously improving water treatment processes and delivering value to our customers. During the first quarter, our technical team conducted a pilot project with a key customer and global leader in the aquaculture industry, aimed at optimizing the water purification process to better handle variations in contamination. The successful outcome of this pilot resulted in a contract award to upgrade the customer's salmon slaughterhouse water treatment system. The solution is fully automated, significantly enhances treatment efficiency across all types of contamination, and includes additional sales of water treatment equipment. This development further strengthens our leading position in the industry.
When it comes to the aquaculture market for water treatment, we have strong ambitions. The Norwegian market, consisting of 45 factories, is awaiting the government's response to their individual discharge exemption applications. Over the next two years, we expect the government to finalize the processing of all the applications. Our expectations are that none of the medium and large-sized factories will receive a permanent exemption. However, it is likely that an implementation period will be granted. We also predict that by the end of 2026, additional salmon slaughterhouses will implement chemical treatment to comply with EU discharge regulations. Looking further ahead, over a three- to five-year horizon, we anticipate that all factories will be required to implement chemical treatment. We are aiming for a significant, approximately 70% market share.
Furthermore, our ambitions are to explore opportunities for growth both geographically and in new business segments such as fishmeal factories, land-based, and sea farming. With our recent milestone in Germany, we can finally announce that our green chemicals now allow for the complete substitution of synthetic chemicals. The VEBIRO contract is valued between NOK 50 million and NOK 125 million and includes a two-year implementation period for the supply of NORWAFLOC to the client's operational units. The implementation has started, involving not only dredging sites but also one sand and gravel washing site. The contract award from VEBIRO positions us to be the first supplier to offer 100% natural products to the dredging market. This is a standard requirement in German municipal tenders and one that, to our knowledge, no other supplier has been able to fulfill until now.
Alongside this, in February, we also won a long-term frame and cooperation agreement with the German company Verde Vision for the supply of NORWAFLOC to agricultural manure dewatering. Looking at our business targets, we aim for our first contract in the large-scale dredging segment and contracts within sand and gravel washing. Our ambition in the longer run is to explore opportunities geographically across several applications. The latest news marks a key milestone in our efforts to establish our business in the Middle East oil and gas market. Saudi Aramco, the largest oil producer in the world, has decided to pilot our NORWAFLOC and NORWAPOL technology. The pilot will be carried out through a two-week project at the Safaniya oil field, the largest offshore oil field in the world, scheduled to start at the end of the second quarter this year.
A successful completion of the pilot, verifying that we can meet treatment criteria for the current and future discharge limits at Safaniya, has the potential to qualify NORWAFLOC and NORWAPOL for use at Safaniya and across all Saudi Aramco oil fields. Given that Safaniya alone produces approximately 30% of the total produced water discharge from the Norwegian continental shelf, this opportunity represents substantial business potential for M Vest Water. Our collaboration with Energy Support Trading and the U.S. technology certification achieved in 2023 has been instrumental in reaching this milestone. In the first quarter, we signed another agent agreement with the Invest Support Company, expanding our footprint to Qatar, Bahrain, Oman, Dubai, and the Emirates. Both our partners represent a wide range of internationally reputed principals with direct access to major national and international oil and gas operators in the Middle East.
We are targeting one or more full-scale pilots in the GCC area and aim to secure our first long-term contract in the Middle East and the U.S. The next step is to build an even stronger tender portfolio, preparing us for the continued growth over the next three to five years. I will now hand it over to Mr. Morten Thomassen, who will provide you an update on the financials and share the key takeaways from this presentation. Thank you.
Thank you to Olav. The positive development in the second half of last year has impacted the first quarter, as we see general improvement in the key figures. Revenues were NOK 4.3 million, which is in line with our expectations and represents a significant increase compared to the first quarter last year. In the first quarter, recurring revenues accounted for 90% of our total revenues.
This, in turn, has had a positive effect on our cash flow, showing an improvement compared to the corresponding quarter last year. Our business activities are increasing. The conversion of our tenders into firm orders will determine the necessary working capital. We have secured a NOK 12 million credit facility to support our current working capital needs. One of the reasons our business model is attractive is that our green chemicals are consumables for our customers, providing us with annual recurring revenues and allowing our company to build value through solid margins. I mentioned that 90% of our revenue is recurring. Year over year, we see an increase of 55%. We are currently a company in the early stage of revenue development, and it's therefore extra important for us to have a cost-efficient supply chain.
We have improved our margins significantly over the past year and are pleased to deliver on the margins we have set for ourselves. Closing off today's presentation, I would like to summarize the key takeaways. Financially, we are delivering revenues as expected. Aquaculture remains our most important business area, but we also expect significant contributions from dredging and oil and gas, as we anticipate growth throughout the year. We have been awarded a contract from a global leader within aquaculture, following a successful pilot to upgrade our water treatment solution for salmon slaughterhouses. This latest development has strengthened our leading position in the industry. The contract award from VEBIRO is a key commercial milestone for M Vest Water. The implementation process of NORWAFLOC at the client's dredging units has started and represents a crucial step forward for our business in Germany.
Finally, I would like to highlight the positive momentum we are experiencing in the Middle East oil and gas sector. Saudi Aramco has decided to pilot our patented technology at Safaniya, the largest offshore oil field in the world. This marks a key milestone in our efforts to establish our business in the Middle East oil and gas market. We expect these larger markets, dredging and oil and gas, to play a significant role as we move forward. We are now finished with our presentation and will move on to the Q&A session.
All right, all. Welcome to the Q&A session for M Vest Water's first quarter results. My name is Nils Thomassen, representing Fron Securities, and I will be the moderator for the Q&A session.
Before we start, I would just like to remind everyone that you can use the Q&A function at the bottom of your screen to submit your questions. With that, I think we just kick off with the first one. It reads, how should we think about the pace of scaling in Germany and the Middle East in the second half of 2025?
Let's start with Germany. Just to give you some context and some color on this, we have a signed contract with VEBIRO, and they have a number of installations in Germany, all over the country, where they have contracts with their municipalities for the dredging operations there. We have now started implementation for around five of these sites. These are the sites where the duration of the contract with the municipalities is expected to end within this year.
When we implement on these sites, we expect it to be implemented in the second half of 2025. When exactly, that is determined by the process in which the procurement between VEBIRO and between the municipalities, the contract negotiations there. We are starting on these first facilities where we expect the contracts to be renewed this year. The second was the Middle East. Yes. The Middle East, we have this, it's Saudi Aramco, we have this contract regarding the pilot at Safaniya that will start during the second quarter this year. That pilot is finished during the second quarter. It's a two or three-week pilot. There will be an evaluation of that. We hope, of course, to get a firm contract as soon as possible, but this is quite a huge plant.
They are treating, they are doing all the water treatment for Safaniya, which is the largest oil field offshore. If you're going to deliver the NORWAPOL and the NORWAFLOC, the NORWAFLOC is our chemical, the NORWAPOL is our filtration unit, which consists of a filtration media and a vessel that takes a little bit of time to engineer and to deliver to that field. If they decide to start the chemical treatment before they deliver the NORWAPOL, the filtration unit as well, we can probably come into a commercial contract a bit earlier. We do not expect that particular project to go into a, convert into a contract with deliveries in 2025. However, after we are finished at Safaniya, we have very good indications directly from Aramco and the agent that we will move on to other fields in the Aramco space.
They have the same problems that they order installations. For some of these installations, they are considering just a chemical treatment. When it is the chemical treatment, the process of going into deliveries is quite faster than if you are going to deliver the equipment as well. I would just also like to mention we have a lot of operations and a tender portfolio in the Middle East. Saudi Aramco and Safaniya is one of them, as you have mentioned. We have some other quite big tenders out now, which we are working very actively on. They are, we know, just deliveries of chemicals, which means that we can come into position to deliver the actual chemicals a lot faster than this one project we have been mentioning. Very good.
I think this question ties into what you've been talking about, Olav, and that's with recurring revenue growing. When do you expect cash flow from operations to start trending towards break-even?
As Morten said, we have a very positive development in the recurring revenues over the last 12 months. We expect that to continue. Of course, the rate depends on how fast we can convert these tenders into deliveries. I expect that we will have positive development in the second quarter. We have a lot of tenders with equipment with the NORWAPOL as well we are working on. That will not convert directly this year, but we are working towards the aquaculture industry and the dredging industry and towards the oil and gas in the Middle East, where we are focusing on the chemicals. We expect that to have a positive trend.
Exactly when, it's a little bit hard for me to say. I don't want to elaborate too much on that, but we are expecting a positive trend. We also need to take into consideration that we are building up some inventory in terms of for some of these tenders, which will consume a little bit of working capital. Of course, have an effect on the cash flow going forward.
Yes, that's clear. Further on cash, you reported a negative cash balance. Can you please give some color on this?
Yes, as Morten said, we have secured a credit facility this spring. We have also a revolving credit facility with our bank. We have, together with the expectation in the revenue going forward, we are comfortable with our current position.
We have also very good dialogues with all our creditors regarding our development and our needs for additional working capital if we should convert some of the larger tenders into orders. We need to build up some inventory for it. In the current situation, together with our projections going forward, we are quite comfortable. Very good. Next question on recurring revenues from three salmon slaughterhouses. What are the prospects for adding more in 2025? We hope to secure some more. We have seen in the latest period that the salmon slaughterhouses have been more proactive in this area, even though they have an exemption from the government. They have been, yeah, they have been, we have been submitting some tenders to them. We hope to convert some of it during 2025, but it will probably be in the fourth quarter.
Morten, you can elaborate a little bit on this, I think.
I think you got it. We hope for the fourth slaughterhouse to start up in the beginning of 2026. Maybe if it turns out to be earlier, we do not know. At least that is what we have of more firm information now. Of course, if any of these slaughterhouses get requirements from the government to take action earlier, there is potential there. We believe that to be realistic, that the next slaughterhouse will, that we will have revenues in the beginning of 2026. Okay. Of course, preparing for this, there is also a potential for us to have sales on equipment and systems.
Yeah. Good. The question on the Saudi Aramco timeline, if it is successful, I think you answered that, Olav, in the first question.
We can move on to the next one. Just as a reminder again, if you want to ask the company a question, use the Q&A function at the bottom of your screen. The question is, figure with tenders and contracts said 11 contracts and 11 tenders versus 16 contracts and 11 tenders in Q4 2024. Why so? Okay.
I understand the question and that it might be confusing. By now, where we stand now, we have in 2025, we have 11 contracts and we have 11 active tenders. That is where we are today. If you look at the contracts, we have seven contracts that are long-term contracts or where we have sort of continuously supply of our chemicals, so 7. Then there are 4 contracts that are more projects and more one-shots or equipment delivery.
If you go back to the last report we had, as the question says, it was 16 contracts and 11 tenders. Many of these contracts were projects that are already completed. That's sort of out of the list. That's the difference. Keep in mind where we stand now, we have 11 contracts for 2025, and we have 11 active tenders where we participate.
I think that's a very good point, Morten. I think the issue is that the contracts we have today, it's more of a recurring revenue. It's not one-off equipment sales. We have increased the share of the recurring revenue, which is reflected in the numbers as well, as you can see.
Very good. As of now, there are no further questions.
With that, I think we can wrap up the Q&A and leave the word to Olav for some closing remarks.
I just want to thank everyone for participating and to continue the interest in the company. I want to thank our shareholders and, of course, Fernley for hosting us. I know there have been some technical issues with this casting of the webcast, but we will make it available on our web page later today so you can see it. With that, thank you very much. You are welcome to contact us at any time.