Good morning, everyone, and welcome to this third quarter operational update for Nekkar. I am Ole Falk Hansen. I'm the CEO of Nekkar, and today I'm with you live from our Syncrolift office at Vestby, just outside of Oslo. Today's presentation will start with a short recap of Nekkar's value proposition. We will continue with some key highlights from our third quarter financials. Then, finally, we will do some more deep dives into the financial numbers and also answer some Q&As. Let's move on. Let's start with a short recap of the company and the value proposition. First of all, as you all know, Shipyard Solutions is the main driver for our financial results. Shipyard Solutions or Syncrolift, as the brand name is called, is the global market leader in shiplifts.
The foundation for Nekkar's new businesses is our competence and background from the offshore oil and gas industry. Based on this, we have formed new business areas within both agriculture and renewables. Then finally, and important, the digital competence, meaning software and automation are integrated into all our business areas. In addition, it's a standalone business offering towards new markets. For the third quarter, we have seen solid execution in Shipyard Solutions, generating good financial results. We have a solid operational EBITDA margin of 27%, which is a very good performance. The revenue is of NOK 79 million and is driven by the new build projects in Shipyard Solutions, which consists of about 80% of the business.
For the quarter, we have seen strong order intake. We have a total order intake of NOK 117 million, which is the highest since 2020. We see now that the market is finally coming back after COVID for a couple of years and some contracts has already been signed. We also see multiple commercial processes still ongoing for larger ship lift projects. The order backlog now is close to NOK 900 million , which creates a good visibility for the coming quarters for Nekkar. Finally, as previously announced, Viasat joins as a partner together with Nekkar and Transocean for improving drilling efficiencies. Subsequent to the quarter, we have signed an innovation agreement for our SkyWalker project together with the installation company BMS Heavy Cranes.
I will come back to that later on in the presentation and give you some more highlights of what that will involve. Let's move on to look a bit further into the financials. As I've already mentioned, we have solid financial results in the third quarter. The activity is driven by the projects in Shipyard Solutions, and the revenue is still impacted by some client side delays in terms of executing and finalizing projects. The operational EBITDA margin in the third quarter was 27%, which underlines the good project execution, which is performed at the Syncrolift business. As you also can see, we have delivered solid financial numbers over the last seven quarters as illustrated.
The average EBITDA margin for the last seven quarters, including Q3, is 27%, which is consistent with this quarter's performance. This underlines the industrial competence and the skill sets within the company, which is built up upon industry experience for more than three decades. Moving on to the Shipyard Solutions or Syncrolift, which is the company name and the company brand name. The service strategy was established back in 2020, and during the last 3 years, we have focused on getting a better understanding and a better control of the installed base. This has resulted in several long-time service contracts with clients where we move from more ad hoc business to more partnership and integrated working relationships.
In 2022, we have so far signed 4 long-term service contracts, and we continue to see good growth in the service revenue and also in the service activities for the coming years. With our installed base of more than 200 systems, we see potential to continue this trajectory and journey for the coming quarters and years to come. Of course, this will out in time result in more steady revenue and of course also long-term customer commitments for both service upgrades and finally also new builds when customers are discussing such opportunities. If we look into the order intake for the third quarter, I mentioned that we have a record high order intake for several years, NOK 117 million.
As you can see here, we have listed some of the key projects which we have signed in the quarter. This gives a good illustration of the Syncrolift coverage. We do smaller service jobs. We have do engineering studies. We have reorders to existing installed systems, and we also do larger upgrades with spare parts. Even though in the quarter there has not been signed any large new build contracts, we see that the order intake is very good based on these several smaller to medium projects. In the quarter, we have lost one contract for a smaller job around NOK 30 million for a Korea project, which some have asked about before.
We see now for the coming quarters to come that there is very good commercial process, and we are in several final negotiations and discussions for new projects to come. The market seems to be coming back, and we hope to be able to take advantage of that in the coming quarters. Illustrating the order intake, as mentioned, we see the highest order intake since 2020, and there are still very high commercial activity for new larger projects. With a backlog of close to NOK 900 million , this provides good visibility for the coming quarters. It's important also to mention that of course, the quarter-by-quarter revenue is dependent upon the project phasing and also the customer execution progress.
That will also steer the quarterly revenues in the coming quarters. Let's move on to Impact Technologies, which is our new business areas. Before we dive into the details of these business areas, I would like to underline that all of these three business areas has as a key part of the strategy to work together with partners in the development phase, and secondly, also secure soft funding during the development. An example of that is of course our SkyWalker installation machine for wind turbines, where we work with partners, Fred Olsen and now also BMS, which I will tell you more about.
In the third quarter, in terms of soft funding, we have received NOK 5.5 million , meaning that and actually the net capitalized cost in the quarter is zero. Furthermore, we have already received a similar amount for the fourth quarter, and we also expect a similar net financial status for the fourth quarter based upon this funding. As I mentioned, the SkyWalker machine, it's a new installation tool for wind turbines, and the goal is to replace the existing crane installation processes. Today we are glad to inform that we have signed an innovation partner agreement with BMS Heavy Cranes, which will join Nekkar and also Fred Olsen Energy in the partnership for SkyWalker.
BMS it's a Danish installation company, which is a key partner to several of the large turbine OEMs. They have a long track record in, installing turbines, both onshore and also now offshore around the world. As illustrated on these pictures, we see today's installation method on the left, where a large crane is used to install the turbine, and on the right-hand side, you see the SkyWalker animation with the new method. What will this partnership look like? We expect that BMS will provide key references and also a deep operational experience, which is important in the final development. Secondly, they will provide key expertise in terms of benchmarking of cost, and also the commercial assessment of SkyWalker as a machine.
Finally, and important, BMS will be an installation partner for the first full-scale model of SkyWalker, and furthermore, also when we roll it out on a commercial basis. We are glad to continue the discussions and iterations with BMS now under a formal innovation partnership agreement. Moving on to aquaculture. This picture illustrates the latest modified Starfish concept, which is our closed cage solution for sea-based fish farming. Nekkar has done modifications to the concept to both increase the biomass volume and also improve the operational efficiency of the Starfish model. We are evaluating sites for a full-scale model installation.
However, it's fair to say that the recent imposed resource rent tax or grunnrenteskatt in Norwegian has impacted the decision-making process at the fish farmers, as you might could imagine. Nevertheless, Nekkar is progressing with the final engineering and development in order to build the first full-scale model of Starfish. Now I will show you a short video of the Starfish concept, which illustrates some of the key benefits to our solution versus the traditional sea-based fish farming. Starfish is designed to both meet the current and of course, also the future regulations. A key part is protection against sea lice, where you have water intake illustrated here at 25 meter +, which is below the sea lice level, in addition to a closed inner bag solution.
Secondly, we also have waste management, collecting the biological waste from the harvesting, and we can pump it back to the surface. There is double protection to reduce the risk of escape, and also the system is fully automated with state-of-the-art software. This gives you some more visibility of the latest and modified Starfish concept. Moving on to digital solutions. Digital solutions offers software control and services to all Nekkar business areas and is an important part in providing competitive and exceptional good products within these business areas. The business area is built upon the Intellilift company, which Nekkar owns 51% of.
In addition to provide services to the Nekkar businesses, Intellilift is also a key provider of software and automation to the drilling industry through our joint venture together with Transocean and now also Viasat, which joins as an equal partner to the joint venture. Inteliwell is about providing a digital approach to a drilling rig to improve both drilling operations and reduce cost. The status of the joint venture is that the software and the technology is finalized for development. The first rig deployment and contract has been delayed with a few months due to rig scheduling at the drilling contractor's internal processes. We have now finalized a live rig installation and test with successful results.
I will show you a short video from the live rig installation and testing, which took place on a ultra-deepwater ship now in third quarter. Let's move into some more financial highlights. As already mentioned, third quarter revenue was at NOK 79 million, which was a decline compared to same period last year. This decline is due to customer-related delays. Third quarter operational EBITDA came in at NOK 21 million in the quarter. However, the reported EBITDA is impacted by unrealized losses on hedging contracts, which are accounted for at fair value. Of course, this unrealized losses is due to the U.S. dollar appreciation against the Norwegian NOK in the quarter.
Order intake came in at NOK 117 million in the quarter, which is a large increase compared to same period in the last year. We see a solid backlog now of close to NOK 900 million as a good starting point for the coming quarters to come. The capitalized development costs were at NOK 6 million, but which were offset by soft funding of similar amounts, so the net capitalized cost came in at NOK 0 million in the quarter. To summarize, and before we round off and move to the Q&A section, I will make some conclusion remarks. We have seen solid execution in Shipyard Solutions in the quarter again, which gives a good financial results. We have a healthy backlog.
The recent awards in the third quarter and the good tender activity we see now on larger projects gives a good outlook for the coming quarters. For Impact Technologies, we develop those together with strong industrial partners, where we have signed new partnerships in two out of the three business areas in the quarter. Going forward, we are positive to the fundamentals in all of our key business areas. With this, I will conclude my presentation and we will answer some Q&As.
Thank you, Ole. We have a question here regarding Syncrolift lift and the customer delays, the delays on the client side. There's a question asking, "Are the delays within Syncrolift now resolved, and should we expect that the coming quarters will show normalized delivery?
Yeah, I think, first of all, of course, we are delivering ship lifts to clients, which is normally either a civil work construction provider or directly to the Shipyard. Of course, we have to follow the execution of the overall yard progress in order to have an efficient value chain for our customers. We, we see that some projects are kind of ramping up again. At the same time, some projects are still impacted by customer execution progress. We expect also that some projects will have delays also in coming quarters, whereas others will come back on stream again.
Thank you. Question on the financials, how much of the foreign exchange contracts are realized losses?
Yeah, those financial losses which are reported are all unrealized, and it's due to the accounting methodology that we have to report those as unrealized losses in our EBITDA. There are no cash effects out of those FX contracts.
Question about, I think it is Inteliwell, which I know you addressed in one of the last slides, but I think it's worth repeating it. At the half year presentation, it was said you expected contracts in the digital solutions business area in a few weeks. What is the outlook for that contract now?
Yeah, we are in good dialogue with the customer for that for the first live rig contract for Inteliwell. The reason for not having signed that contract yet is, as mentioned, due to some internal rig scheduling programs at the customer site, which has led to that the intended rig went on to another location than what was expected. We are now in dialogue for a new rig program, and we hope to conclude that in short time.
Thank you. There are a couple of questions about tendering activity in the Shipyard Solutions business areas. Are you close to signing any new build contracts? What is the potential size of the new build contracts you are tendering for?
There are good activity in the shiplifts market in many areas and parts of the world. And of course, these projects are complex and also integrated into a whole yard execution process, so they take time. I think the majority of the large projects we are working on, we have worked together with the potential customer for at least quarters and also a few years. And we hope and believe that some of these will now be concluded within short time. And in terms of size, we said that this quarter we signed several smaller and medium type projects, but not any large ones.
We expect that the large one will be closer to NOK 100 million than kind of NOK 50 million to give an example. Of course, they vary in terms of size depending on the setup and location.
Thank you. Question about order backlog. How sensitive is the order backlog to the U.S. dollar? Will it decline if the U.S. dollar depreciates? I guess he means against the NOK.
Yeah. Of course, there are some sensitivity on the backlog for the dollar and of course also the correspondingly, of course, also the cost will have a positive development if the dollar depreciates against the NOK. Of course, this year there has been quite large variations in the dollar. I think we are managing those effects quite good.
Here a question about potential share buybacks. Are you considering share buyback as, given that your cash position is growing and the share price is declining?
Yeah, I think that's a question up to the board of directors to decide whether we will do that or not. I don't have any further comments on that.
Here, another question about the backlog. How many years of work does the current order backlog represent?
Yeah, of course we.
How long period?
Now we have NOK 900 million in revenue or in order backlog. Of course, if you look upon our historical revenue level, of course that backlog at least gives a very good visibility for the coming couple of years. We expect to sign new contracts both short-term and longer-term. Also the pipeline is quite good in terms of forecoming projects in kind of 12 months- 18 months horizon, which is what we have good visibility on.
Thank you. There's a question about Inteliwell contract. I mean, the question is what is a typical size? I guess you don't wanna comment on specific figures, but maybe you can say a few words about how what type of contract it is.
Yeah. It's, it's a day rate type contract, whereas Inteliwell will provide a day rate OpEx to the drilling contractor or the oil company, and whereby Intellilift, which is Nekkar's position in that, will receive a kind of a fair share out of that contract. Of course, the contract would normally be linked to a drilling contract that the drilling contractor has with the oil company. A contract could be from kind of 12 months-18 months. In terms of the kind of details of the day rates, I don't think we will comment on those commercial points.
Question about Shipyard Solutions. Do you see further potential on the service side of the ship lift business?
Yes, certainly. That's, that's a key part of what we are working on. We also see that in some of the new projects that we are discussing with our customers, also the service part is an important part of the, not the award itself, but in terms of choosing the supplier. We would foresee that some of these projects will also have a potential service, long-term service contract, being discussed and negotiated after the project is signed. That's.
There's a tendency to work more, closer and have a higher focus on the service part now than probably the situation where a few years back, both internally at Syncrolift, but also from our client side.
Thank you. Question about raw material risk. How do you mitigate risk in terms of raw material cost volatility for your order backlog? I guess that's for the Shipyard Solutions business area.
Yeah
primarily.
Now, the key point there is, of course, to lock in sub-suppliers at an early stage in the process. What we do is, of course, to both during the tendering phase, but also after contract being signed, to finalize the needed engineering work in order to be able to place those purchase orders and basically lock in the sub-suppliers at an early point in time. That's key for doing that.
Thanks. A question about Starfish. Does the Starfish concept have a higher energy demand than the traditional design? Do you expect the higher energy prices to increase the OpEx on the Starfish solution?
Yes, it has a higher energy demand. Of course, that's due to the fundamental of it, that you are pumping water from the sea level and of course also injecting oxygen and other things. Of course, that's part of the business case that you have to take into account, whereby when you evaluate doing a closed solution compared to an open pen solution. Our business cases shows that even though you have some higher energy demand, of course, the reduction in other operational costs as sea lice treatment and, of course, also the fish mortality and growth factors are more than compensating for the higher energy demand and also the higher cost from the initial purchase.
Thank you. There's a question. Can you explain further what happened to your finance costs? I'm not entirely sure what that person refers to, but it may be currency effects, of course, I guess, Ole.
That's related to the. I think if you look on the difference between the operational EBITDA and the EBIT, you will see the large currency effects from the unrealized losses and then from the EBIT reported to the net results. There is also some actual effects from the currency portfolio, which impacts those as the EBIT reported is on a low level as it's positioned.
Okay. There is one question here asking you to look into the crystal ball. Ole, do you expect the currency loss to be reversed in the coming quarters?
That's a very hard question to answer. I think of course you can see now that so far in this quarter, of course, there's been a depreciation in the dollar against the NOK. Of course, some of that unrealized loss is reversed so far. As mentioned, there is no cash effects from those. They don't impact our cash bottom line.
Thank you. We also have received a couple of questions about detailed figures on the balance sheets. Just to remind everyone that we Nekkar reports, you know, full balance sheet and cash flow statement, every on Q2 and Q4 every year. I guess in general terms, Ole, if you wanna say something about cash position and debt position, I think that that should be okay, right?
Yeah. We have no financial debt in the company. We have also secured funding for that if we need to have that for other purposes in the future to have some more flexibility. I think the financial balance is well positioned with the company.
Thank you. I think that covers all the questions and the topics for today. Thank you for joining, everyone.
Thank you.