Good morning everyone, and welcome to this second quarter presentation for Nekkar. I am Ole Falk Hansen. I'm the CEO of Nekkar, and I started in this company 1st of July this year and so far I must say I've had a good impression of the company, its position and its people in the organization. Today, we will start to share with you a short recap of Nekkar's value proposition before we will move into the main headlines for today, which is the key highlights for our second quarter. Finally, Kristoffer Lundeland, our CFO, will give you some more details of the financial results before we will move into some Q&A at the end of this session. Let's start with a short recap on Nekkar's value proposition.
First of all, Shipyard Solutions, that's still the main driver for our financial results, and Shipyard Solutions is the global market leader in ship lifts. The foundation for Nekkar's new business is based upon our competence and background within mechanical engineering, electrification, automation and digitalization. With this background, we try to develop disruptive technologies with software and hardware solutions to ocean-based industries. Today, Nekkar consists of four business areas. We have Shipyard Solutions with our brand, Syncrolift. We have Aquaculture, Renewables, and we have Digital Solutions, which offers digitalization and automation services across all Nekkar's business areas. The Digital Solutions business area is also our partner in InteliWell joint venture, which I will tell you a bit more about later today. Let's look a bit further into our second quarter highlights. We have seen solid execution in Shipyard Solutions, generating decent financial results.
Our revenue ended at NOK 100 million in the quarter, driven by new build projects in Shipyard Solutions, which consists of about 80% of the business. Our operational EBITDA was solid at NOK 25 million and 25% of revenue. Order intake ended at NOK 24 million, which consists of upgraded service orders in the Shipyard Solutions business area. No orders are lost in the quarter, and we see high tendering activity at the moment. Furthermore, subsequent to the quarter, we have announced the new upgrade contracts of about $5 million within the Shipyard Solutions business area. For Starfish, our aquaculture project, we have completed more than 1 year of ocean-based test pilot, and the concept is now optimized to handle more biomass volume and better operational efficiency. For SkyWalker, the wind tunnel test were completed with outstanding results in the quarter.
Finally, we have the joint venture we have with Transocean have now been joined by Viasat, which I will tell you a bit more about later in this presentation. A bit more into the financial results. We have seen solid financial results in second quarter. The activity is, as mentioned, driven by projects and also service in the Shipyard Solutions business area. The operational margin in second quarter is about 25% and is based upon good project execution. This is also consistent with the historical figures and as you can see on this slide, last six quarters of EBITDA margin is about 25%+, and this is based upon a strong industrial competence and skill set in executing large projects within the Shipyard Solutions business area.
As you might remember, last year were driven by some exceptional results in this business area by finalizing several new build projects. Going forward, we continue to see expectation for decent performance in the coming quarters. Let's look a bit more into Shipyard Solutions. Shipyard Solutions is for us our Syncrolift company and brand. We have a solid backlog out of second quarter of roughly NOK 800 million. The new intake in the quarter comes from service and upgrade work. As mentioned additionally, after the quarter, we signed an upgrade contract in August for $5 million. We see the importance to work closely with the installed base and our long-term customers in order to optimize and sell upgrade and service work later on.
At the moment, we have high tendering activity in this business area, and we believe no contracts have been lost in the quarter, and we expect to sign new projects in the second half of this year. The service strategy were established back in 2020, and we have previously presented to you some of the service strategy. We are focused a lot on getting a better grip on our installed base, what customers we have been working with, and what equipment we have at different ports around the world. This has resulted in several long-term agreements.
This first half, we have signed four new long-term contracts, and we see the potential for more as we have an installed base of over 200 systems around the world. As illustrated on this slide, we are moving gradually from ad hoc spare parts, small service orders to work more closely and more integrated with our customers in order to provide higher operational uptime and of course a closer partnership with our customers. This will also result in more steady revenue and long-term customer commitments as the long-term service contracts are starting to ramp up. Some more details of the financial figures for our service and aftermarket. If we look upon the revenue, the first half of this year has seen 150% growth versus last year in service revenue.
Service revenue now consists of about 15% of last 12 months revenue, which is an increase from about 10%, which has been the case earlier on. We still believe our target to increase the service revenue to above 20% is realistic, and we are working to get there. The order intake in service continues to grow. We see a tendency for larger contracts and also longer contracts as mentioned. In the second quarter, we signed two long-term service contracts, and in the first half, we signed in total four long-term service contracts. That's a short recap on the Shipyard Solutions business area. Now I will move into Impact Technologies, which consists of, amongst other, the Digital Solutions business area. Today I would like to give you a short deep dive of Digital Solutions.
Digital Solutions, they offer software controls and services to all Nekkar business areas, and they are an important contributor in delivering projects, increasing their competitiveness, and developing new products for our business. Digital Solutions is built up upon our 51% ownership in the Intellilift company. Intellilift has a key expertise and track record within digitalization, automation, and remote controls of heavy machines and complex offshore solutions. Today's focus will be on the joint venture, which has been established within the oil and gas offshore market. October last year, we announced a joint venture with Transocean, which is the leading international offshore drilling provider. Now we are glad to inform you that Viasat will join as an equal partner to this JV together with us and Transocean.
Viasat is a global communication company, and through their Intelie subsidiary, they will provide real-time data analytics and planning modules and complement Transocean's and Intellilift's offering in this joint venture. InteliWell, as the new joint venture is called, will then provide a digital approach to a drilling rig to improve the drilling operations and reduce the cost. The status of this joint venture is that the software and technology is now finalized development. In this quarter, we have done live rig testing where all equipment and software worked according to our standards. We believe the first rig contract for installation and software as a service will be signed within few weeks for the joint venture. I will try to give you some more explanation of the software as a service products offering of InteliWell.
On this slide, you will see the three main software packages which InteliWell provides to drilling operators. InteliPlan is a digitalization of today's manual well plan. InteliAssist provides real-time data from the well, and it's continuously implemented in the well plan in InteliPlan. This data will give implications and feedback to the top side activities on the rig. That's where InteliAutomate, which is an automation of the rig equipment and heavy machines by implementing the data and the instructions from InteliPlan and the live feedback from InteliAssist. In other words, you can say we try to move from operating joysticks to running closer to an autopilot on an offshore oil and gas rig. Of course, the benefits for this will be that we will improve the drilling performance and the consistency.
Of course, this will then lead to reduced rig days and reduced OpEx and of course, also higher HSE performance. What is the market for these software services? We believe all offshore rig fleet is an addressable market, and at the moment, we have a steadily growing active fleet of close to 500 units operating. At the moment, we see solid fundamentals in this business as the oil price is at high levels and also rig day rates are increasing. Also, as you can see on this picture, the two screens to the left are the InteliWell operating screens onto an offshore oil and gas rig. Let's move into the renewables.
Our SkyWalker machine is a new innovative installation tool for wind turbines, and our goal is to replace the existing gigantic crane installations which are used for wind turbine installations. In the previous quarter presentations, you have seen our downscale model of the SkyWalker machine. In this quarter, we have now completed wind tunnel testing, and we have seen extreme operational opportunities in terms of operating in high wind speeds. At the moment, we are in discussion with industrial partners for building and testing a full-scale SkyWalker model. As many of you also have recognized, there is a lot of attention around offshore wind these days in Norway. SkyWalker is also here an opportunity whereby we are looking into alternatives for wind turbine installations at ports in Norway or Europe in order to support the offshore wind development plans. Moving on to Aquaculture.
A short recap. Starfish is our closed cage solution for sea-based fish farming. We have designed the Starfish to meet current and also future regulations for sea lice problems, waste management, escape issues, and also reduce environmental footprint. We have now completed more than 15 months of sea-based test outside Flekkefjord at Hidra, and we have seen valuable experience and results from this testing. We have now done some modifications on our concept, and we have implemented those in order to increase biomass volume and also improve the operational efficiency of Starfish for the fish farmers. We are now in commercial discussions with fish farmers for a full-scale model for delivery in 2023. Now we will move a bit into the financial highlights, and the next slides I will leave for you, Kristoffer.
Yeah. Thanks for that, Ole. Just move on to the next slide. Yeah. As Ole has already been covering in the first part, we have experienced good activity in the second quarter with revenues of NOK 100 million and NOK 184 million for the first half year of 2022. This compared to last year with revenues of NOK 122 million for the quarter and NOK 250 million for the first half of the year. Again, as Ole said, the new building business of Shipyard Solutions accounted for approximately 80% of total revenues in the first half of 2022. However, we continue to see strong growth in the service and aftermarket sales with revenues of NOK 34 million compared to NOK 14 million in the same period last year.
Looking at the operational EBITDA, which excludes unrealized losses on foreign exchange hedging contracts, ended at NOK 25 million, which represents a good EBITDA margin of close to 25%. As Ole has already covered, the operational EBITDA from the previous period in 2021 were exceptionally strong and also highly impacted by the successful deliveries of three new building projects in that quarter. The reported EBITDA in the second quarter ended at NOK 6 million. As you can see, it was highly impacted by unrealized losses on hedging contracts. It is important to note that these contracts are accounted for at fair value on the balance sheet date, and that the negative accounting effect, it's mainly due to the fact that the US dollar saw a significant appreciation against the Norwegian kroner in the first half of 2022.
The order backlog is still strong at NOK 795 million at the end of the second quarter, which will secure good revenue visibility for the group also in future periods. As Ole said, we are seeing increased activity in the market, which is also reflected in recent contract wins. The composition of the backlog is mainly from the new building contracts of Shipyard Solutions, which accounts for roughly 75% of the total backlog, while the remaining is related to both long and shorter term service contracts. Our capitalized development costs, R&D investments, amounted to NOK 9 million in the quarter and NOK 18 million for the first half of 2022.
Ole has already been through these investments are mainly related to our new technologies, Starfish and SkyWalker, alongside our Digital Solutions business area. Here, to note that a part of these development costs will be offset by public funding schemes. In Nekkar, we always strive to apply for public grants to support us in our journey with investments into new sustainable technologies. We can move on to the balance sheet section. A brief look at the consolidated balance sheet shows total assets of NOK 474 million at the end of the second quarter.
Compared to NOK 451 million at year-end 2021. As you can see, bank deposit still accounts for a significant part of our assets, sitting at NOK 188 million at the end of the quarter. In summary, Nekkar has a solid balance sheet. We have a strong cash position and no financial debt. The equity ratio at the end of the quarter was above 71%. Now we can move on to the cash flow statement. Operating cash flow was positive in the first half of 2022 with NOK 22 million, compared to a negative cash flow of NOK 41 million in the same period last year. As you can see, we did experience a slight increase in net working capital in the period.
However, we did receive trade receivables in the region of NOK 50 million in the early parts of July. Cash flow from investing activities ended at NOK 19 million, which again is related to our R&D investments in new technologies as SkyWalker and Starfish. More details on these projects and our investments can be found in the second quarter financial report. The comparable figures for the first half of 2021, as you can see, is highly impacted by the settlement of the Cargotec and MacGregor arbitration case. All in all, we had a positive cash flow of NOK 14 million in the first half of 2022 and we have a strong cash balance at the end of the quarter.
That was a brief summary of the financials in the period and, as I said, you can find more details within our financial report.
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Thank you, Kristoffer. Let's summarize before we round off and move to the Q&A session. We have seen a solid execution in Shipyard Solutions, which generates decent financial results. Our backlog is healthy. We have had recent awards, and we have good tendering activity at the moment, which gives a promising outlook. For our Impact Technologies, Digital Solutions are now in the phase of customer contracting and deliveries. For Aquaculture, the decisions are to be made on location with fish farmers for the first full-scale model in 2023 delivery. For Renewables, we are discussing different partnership models and different opportunities in terms of bringing the machine to the market. With those concluding remarks, I would like to thank you all for listening, and we open up for Q&As.
Thank you, Ole. There are a few questions that are asking specifically about the plan for commercialization of the Impact Technologies. I know you've touched upon it in the presentation, but maybe you can give a quick recap to avoid any to ensure clarity on both Digital Solutions, Starfish and SkyWalker. The plan for commercialization, please.
I think if we look upon Digital Solutions and the Intellilift and InteliWell joint venture, those services are now being offered to clients. As I mentioned, we expect contracts for those software services to be signed within a few weeks. That means that we are actively pursuing several customers and addressing the market as I explained to you about in order to roll out deliveries of the services offered by InteliWell. I think the next one in line is the aquaculture and the Starfish concept. With Starfish, we have now completed the ocean-based test. We have optimized the concept and revised concept is now offered and discussed with a couple of fish farmers in order to land and agree upon a model for a first full-scale model for delivery in 2023.
Secondly or thirdly, and lastly, it's the SkyWalker business area. The SkyWalker is, of course, extremely heavy machines, and it offers a completely new way of installation of wind turbines. That means that we are discussing different models and different ways of bringing that machine into a full-scale model, and we believe those discussions will take some time before we will conclude on a delivery. That's, I think kind of, illustrates those three Impact Technologies areas in commercialization.
Thank you very much. There are also a couple of questions about InteliWell. Can you say something about how a typical contract for InteliWell would look? Is it a fixed daily fee per rig, or is there any form of user fee, license fee, et cetera. I mean, I don't think anyone expects you to go into the financial details, but if you can explain the typical contract structure, please.
Yeah. A contract structure would typically be a kind of an upfront installation part, which covers some smaller rig installation tools. Then it will be combined with a monthly or a day rate as a software as a service, which kind of runs when the rig is operating. With those three products, which I showed you on the InteliWell JV slide, those have each its own pricing, which then will be rig day-rate based. Of course, on top of that, you can also discuss and think about other things to kind of top those day-rate software services with.
Thank you very much. A question for you, Kristoffer. You've touched partly on this topic in the presentation, but just to avoid any misunderstandings, can you please explain why the EBIT is so low in this year's second quarter compared to last year's second quarter, so Q2 2021?
Yeah. As we said initially, the second quarter of last year was exceptionally strong with the delivery of three new building projects. If you look at the difference between the operational EBITDA figures and the EBIT in the second quarter of 2022, it's highly affected by the unrealized loss on hedging contracts, which amounted to in the region of NOK 19 million. There it's important to note that we account for this at fair value at the balance sheet date, but it's not a cash effect in the quarter. It has an accounting effect, so that's the explanation why the EBIT is deviating quite significantly from the operational EBITDA.
Thank you. Question to you, Ole. Can you say something about how global energy prices are currently impacting demand for Nekkar's technologies?
Yes. I think overall we see kind of a positive demand in terms of our services. If you look upon the InteliWell JV, that's of course have good fundamentals with high oil and gas prices. If you look upon SkyWalker, of course, wind is hotter than ever with the recent plans in Norway and Europe in terms of development of new capacity. If you look upon in the fish farming industry, of course, pricing and demand is very good at the moment. Of course, on the contrary, our products and technologies also are affected by the global supply and value chain in these products.
Of course, we are actively monitoring all pricing and costing in order to make sure we have an up-to-date cost view and of course also take those things into account when we execute and sign the new contracts. We don't have any direct exposure in terms of own production and so on in our own warehouses, so those effects are limited.
Thank you. There is another question. Can you say something about how the current geopolitical situation and particularly increased national investments in defense budgets can or could affect the Syncrolift business?
Yeah. I think as you may know, many of the Syncrolift's customers is related to or directly within the defense industry of its own national countries. Of course, we see that with the current geopolitical environment, more and more countries are building up and ramping up their defense systems and of course making sure that they can handle all different scenarios. With Syncrolift, of course, an efficient and quick and good way to dock and lift navy vessels and submarines is of course an important part of a national defense system. We see that those things are as such positive for the demand of such products and services.
Thank you. Question to you, Kristoffer. Can you explain why your trade receivables have been so high the last two quarters compared to previous years?
As I said, we have received a large amount of those trade receivables, which was NOK 111 million at the end of the second quarter. I believe we received roughly around NOK 50 million in the first week of July. There is no significant trend in that. We don't really have any concerns with regards to our trade receivables. As I said, we have received a significant amount so far this year.
Thank you. There are also a number of questions about specific tenders for the Syncrolift business. Many are mentioning the Darwin tender award. I know that you guys don't wanna go into specific projects. Can you say something on a general level within sort of ship lift and ship transfer system about tendering activity and expectations of tender awards, please?
As mentioned, we expect to sign new larger contracts of new build or upgrade systems within this business area within the second half of this year. We are in multiple tender activities within this business area, and we expect to see some of those materializing in the second half of this year. Those tendering processes can take a long time, and of course, some of them have been progressed for several months already, and some still need some months in order to conclude on those. We believe Syncrolift has a good fair chance to win our portion of those contracts.
Thank you. Question to you, I guess, Kristoffer. Does the current order backlog or the contracts that make up the backlog have inflation clauses to protect them from inflation?
No, not that I'm currently aware of. I don't think so. However, most of our backlog is denominated in euros or U.S. dollars, which the currency effects also plays its part. Having said that, we strive, in every contract negotiations, to try to increase our prices if we experience increased prices from sub-suppliers and so forth. We always strive to protect our margins, well, by increasing prices out to the end customer. The backlog that follows a set price most openly follows a fixed price in the contracts.
Thank you. Question to you, Ole. Now, is the company having any issues on keeping talented engineers and employees in the current very active human resources environment?
Of course, it's a war for talent. Of course, with our plans, we need to add more engineers in the coming quarters. Of course, it's not easy to get hold of talented people. We believe Nekkar has a good value proposition and also has a kind of a good playing ground for engineers and also other professionals. Nekkar is located mainly in Kristiansand and in Vestby. In those regions, we try to attract our people through our networks, of course, working with universities and other ways in order to gain those people that we are looking for. It's not an easy task.
We believe we have a good offering also for new people to join us.
Thank you. The question about Starfish and SkyWalker. Do you expect to enter joint ventures for Starfish and SkyWalker or do you expect to own the products and the companies like 100% going forward?
Yeah, I think we are kind of open for all business opportunities and models in order to get our unique technology and products out there. I think that's also something which is special with Nekkar that we don't need to own everything 100% our own. You have seen that with the InteliWell joint venture. Instead of kind of being a smaller player in a very large international market, we team up with high and large players and brands in this industry. I think we have seen that that has been valuable in terms of kind of commercializing that market. We don't rule out that we will do similar types of alternatives within the other Impact Technologies.
Thank you. We have one final question regarding potential share buyback program. I guess that is something that should be addressed to the board of directors and not the management of the company. Apart from that, there are no further questions. With that, I think we'll say thank you for attending today's webcast. If you have further questions that haven't been answered in today's presentation or the Q&A, please do not hesitate to send your questions on email to ir@nekkar.com, and the company will respond to them. Thank you for attending.
Thank you.
Thank you.