Good morning, everyone. I am Ole Falk Hansen, the CEO of Nekkar, and welcome to this Second Quarter Presentation for Nekkar. As normal, we will round off with some Q&A after the presentation. Nekkar is an industrial company builder focused on ocean-based technology. The Nekkar Group now consists of five operating companies. There have been no changes to the portfolio so far this year, but we are having several processes ongoing at the moment to both broaden our portfolio and deepen our existing investments. The Nekkar operating companies are exposed to four main end markets, with defense and maritime being the largest. The target market revenue mix is also fairly balanced across these four. We have seen a steady growth in defense through Syncrolift in the recent years, and we see the same in the future tender pipeline. Let's look at some highlights for the second quarter.
Syncrolift was awarded a life extension contract for the U.S. Navy on the Diego Garcia naval base for $3 million in the second quarter. It was also pleasing to see Syncrolift announcing an order for two ship transfer systems to Dubai Maritime City just after the quarter. Syncrolift has delivered several systems to Dubai Maritime City previously, implying renewed confidence from the customer. Techano Oceanlift was awarded a 70-ton repeat order for a Norwegian ship owner of around NOK 60 million in the quarter. Revenue for Nekkar came in at NOK 139 million, which is down from NOK 150 million same quarter last year, and the EBITDA ended at - NOK 12 million for the group as a whole, as the negative drivers that impacted our first quarter also impacted the second quarter.
We continue to view the negative EBITDA in the quarter as disappointing, but remain confident that this is a passing situation. The negative profitability figure was again driven primarily by the previously mentioned Techano legacy projects, with one-off costs and amplified by lower volume contribution from Syncrolift, as newly announced projects have yet to scale up and further order intake are expected in the future. However, we continue to see a positive underlying development in the other companies for the coming quarters and years ahead. Net profit of - NOK 10 million was positively impacted by FX effects that help to partly offset our negative EBITDA. Nekkar still maintains a strong balance sheet with solid cash of NOK 225 million, NOK 64 million in treasury shares, and no debt.
The order intake was NOK 147 million in the quarter, driven by the announced orders in Syncrolift and Techano as the primary drivers. Finally, in Q2, we achieved a strong cash flow from business of NOK 52 million. Our second quarter revenue is similar to historical levels and slightly up from last quarter, as new activity comes into effect from Techano. The EBITDA is still below our historical track record and also our own expectations, but is expected to improve as legacy projects in Techano wrap up. However, given Nekkar business activities, there will be quarterly fluctuations due to phasing of projects, project mix, currency development, and other factors. The order intake was NOK 147 million, which was driven by the previously announced award for a 70-ton crane to Techano Oceanlift and the Syncrolift upgrade of Diego Garcia U.S. Navy base.
The order backlog at the end of Q2 was NOK 753 million, which provides decent visibility for the coming quarters. The majority of the backlog is still related to Syncrolift, but more than NOK 100 million is from other operating companies. Please note that the announced DMC contract for Syncrolift, which was signed in July, is not included in the figures. Let's dive into the business, and we will start with Syncrolift. For market and sales, the tender activity remains high and is driven by growing demand in the defense market, which now represents a substantial share of tendering activity. As mentioned last quarter, these contracts thus however carry with them some uncertainty related to the exact timing of the award, as they are impacted by government planning and general infrastructure requirements.
That means that order awards may slide in time independently of one another, due to similar mechanisms and also without decreasing the likelihood of a contract coming to an award. As such, no larger contracts have been awarded nor lost in the quarter to Syncrolift or competitors. For the financials, second quarter revenue was lower than expected, primarily driven by the low order intake the last 12 months. This also impacts profitability with lower pass-through of revenue to gross margin. The EBITDA of Syncrolift was 4% in the quarter and was in addition impacted negatively by the depreciation of the U.S. dollar against the NOK and also some project profit mix effects. For the operational side, the ongoing projects, we still see solid execution and cash generation.
As mentioned before, Syncrolift has a flexible operating model with outsourced production, which enables scale-up in activity level going further as new awards are likely to come. For the service business, we have seen a decent activity level with upgrade work driving favorable developments. During the second quarter, Syncrolift was awarded a contract by the MVL Group on behalf of the U.S. Navy for life extension services to the ship lift and transfer system at the Diego Garcia naval base in the Indian Ocean. Just after the quarter end, Syncrolift was also awarded a contract to deliver two ship transfer systems to Dubai Maritime City. This is a follow-on award from contracts won in 2022 and 2024, where we have delivered ship lift upgrades, transfer systems, and service agreements with the same customer.
I've shown this slide before, and I will not go into the details, but highlighting that the exposure of Syncrolift to defense as an end market is a vital one. As a leading defense and naval supplier, Syncrolift directly and also indirectly works with some of the world's largest navies, specialized naval yards, and commercial yards working on government contracts. We continue to see a healthy outlook ahead for Syncrolift activity levels, where the backlog remains around NOK 550 million. We also see high tendering activity in the new build upgrade segment. For the tender pipeline, there have only been small changes in the figures from the last quarter on timing primarily. We still expect a good market outlook for Syncrolift in the coming couple of years, with several billion NOK of tenders to be awarded. Let's move to Techano Oceanlift, our offshore lifting and handling technology provider.
The company was awarded a repeat 70-ton subsea crane of NOK 60 million in the quarter. On the revenue side, the NOK 35 million were above historical levels due to ramp-up of newly awarded projects. The EBITDA was, as mentioned, negatively impacted by cost increases in the first two market entry projects. For these first deliveries, we have entered with lower prices and in addition experienced additional one-off costs in the last quarters. These projects are now coming to an end, with delivery approaching soon. The new projects contributing to the increase in revenue are yet to reach a progress stage where we start booking profits. Hence, no profit contribution yet from these projects are booked. While the recent awards of both a 70-ton crane and a 150-ton crane are known to the market, this slide still works well in highlighting the benefits of repeat awards.
For such contracts, we will experience lower engineering costs and lower complexity. With design work and technological developments already completed in the previously mentioned projects, a cost and uncertainty driver is reduced. Furthermore, we will improve efficiency in project execution by utilizing the existing production setup. Intellilift is our industrial software and automation provider. We are pleased to see solid market interest internationally for new products and automation solutions from Intelliwell, which is our joint venture with Transocean. Financially, growth in external order is driving positive activity development, as the second quarter revenues are up 36% year- on- year. Operationally, Intellilift now has a strong focus on automation, as the game-changing automation platform is beginning to demonstrate its potential.
In Globetech AS, which we acquired about a year ago, we continue to observe high customer activity on the market side, with sales driven by new vessels and deliveries to existing clients. The company also signed a new undisclosed client through the quarter, which includes contracts for two luxury cruise ships. Revenue for the quarter was NOK 25 million, up 14% year- on- year for the company, with a continued solid profitability of 28% EBITDA in the quarter. The company has now also strengthened its team with multiple senior hires, including a new board member. Let's move to FiiZK, our closed-cage solution provider. The [Miljøflex] is now approved by the Norwegian government and goes into effect this fall. This will enable recovery of withdrawn biomass by converting to closed-cage technology, whereby FiiZK meets requirements for these installations.
The continued interest in closed-cage technology is expected to develop positively due to the implementation of the above-mentioned [Miljøflex] regulation. The second- quarter revenue was NOK 41 million, primarily driven by the two Protectus projects awarded in the fourth quarter last year. These units are scheduled for delivery in the second half of this year. While the revenue is a decrease year on year, it's worth mentioning that last year's figures had business units that have since been divested. The profitability of FiiZK is still impacted by cost for market entry projects and current volume level. As we highlight in this slide, several fish farmers are now reporting positive results from utilizing closed-cage systems as part of the production strategy. Both Movi and Sinkaberg are expanding the solutions as part of their post-smolt strategy. With the recent government-driven incentives, we expect this development to continue.
Let's move to the financial update. Firstly, on the revenue side, the revenue for the quarter came in at NOK 139 million, representing a 7% decrease compared to the same period last year. The decline is primarily due to lower activity in Syncrolift, where new contract awards are taking longer time than anticipated. On a positive note, the other operating companies, Intellilift, Techano , and Globetech , delivered solid revenue contributions. The EBITDA ended the quarter at a disappointing - NOK 12 million compared to a + NOK 20 million last year. This is below our performance expectations, but reflects previously communicated factors, which are temporary low project activity in Syncrolift, increased cost in market entry projects in Techano , and some negative impact from the USD/NOK exchange rate.
Second quarter net financial items of NOK 4 million are driven by foreign exchange effects and fair value changes of derivatives of NOK 7 million, and Nekkar's share of FiiZK's quarterly profit of - NOK 3.5 million. As a result, the net profit for the quarter was - NOK 10 million. Earnings per share were -NOK 0.1 for the second quarter compared to NOK 0.19 per share last year. On this slide, you will find key financial metrics for Nekkar operating companies. Further information is available in an Excel upload to the Nekkar webpage, and we will be updating these on a quarterly basis going forward. Let's take a look at our balance sheet. Starting with the assets, our financial assets are mainly tied to our ownership in FiiZK.
As of the end of Q2 2024, this investment is valued at NOK 72 million, reflecting Nekkar's share of FiiZK equity and goodwill. The working capital ended at - NOK 22 million, which is a NOK 63 million improvement since last quarter. Main drivers to the reduction in working capital is a decrease in accounts receivable, combined with a large increase in prepayments from customers. Nekkar's total balance sheet amounted to NOK 830 million at the end of the second quarter. We remain debt-free and have a robust equity of NOK 417 million, compared to a solid equity ratio of about 50%. As mentioned, we saw a very strong cash flow from business in the second quarter of + NOK 52 million. This was driven by a significant reduction in working capital, combined with a positive contribution from financial items and partly offset by negative EBITDA.
We also had a cash outflow of NOK 9 million during the quarter related to the share buyback program. In total, net cash flow of + NOK 43 million for the quarter. Our strategic target that we presented at the end of last year is maintained. As announced, we aim to reach over NOK 2 billion in revenue by 2027 through a diversified and well-balanced portfolio. We plan to expand to six to eight platform companies. The focus is still to deliver financially solid results from this larger and more diversified portfolio. Towards 2027, we aim to grow organically to at least NOK 1.5 billion and add a fair share of M&A to deliver the NOK 2 billion target. For the quarter, I will make some concluding remarks. In the quarter, we had soft revenues driven by Syncrolift's lower activity.
New project awards are taking longer than anticipated, which also impacts the EBITDA, which was below a satisfactory level for Nekkar. Additionally, the cost overruns in Techano market entry projects led to a negative EBITDA of NOK 12 million. Our solid balance sheet, combined with order intake for Techano and high tendering activity in Syncrolift, provides a solid outlook for the business. For Globetech and Intellilift, we continue to grow the companies at a steady pace. With FiiZK, we are expecting increased commercial activity from favorable regulatory changes proposed and soon to be implemented. I would also like to invite you all for our first Capital Markets Day to be held on the 13th of November, with the opening of Syncrolift's demo and training centre in Vestby outside of Oslo. With this invitation, we will now move over to some Q&As as of now.
Thank you. There are a few questions on the line. Let's start with one on Techano. It's positive to hear about more potential contracts for Techano. Can you elaborate a little on the differences between first build and expectations around future contracts in terms of profitability and delivery?
I think, as I mentioned, we see now that delivering the first build of the advanced offshore heave compensated cranes has had, of course, significant complexity with it, both related to engineering questions, related to production setup, and other elements. These two first projects are now soon to be delivered, and the two newly signed projects, the 70-ton crane announced now in Q2 and the 150-ton in the first quarter, are repeat contracts of these two initial deliveries. That means that we have significantly reduced the uncertainty, and also we have a much stronger view on the actual cost base, as we have taken the experience and the figures from the first projects into our calculation and pricing of the newly awarded projects. By these drivers, we think that the two new projects have a much lower uncertainty level related to it.
Thank you. One on Syncrolift. We keep hearing about high tendering activity throughout the last year. Can you elaborate a little bit on the reasons behind the uncertainty on the timing of awards on these contracts?
Yeah, I think that the uncertainty of timing has been something that's kind of been with Syncrolift for several years. Of course, if you look historically, there has also been kind of lumpy award timing, whereby some years have been significant awards and some years have been lower awards due to the market and customer award timings. I think the uncertainty is primarily related to that tender processes are often, I would say, unstructured in terms of timeline and milestones and are related to, of course, other factors which are impacting the actual award. For instance, for 2025 now, we believe about NOK 1 billion of awards are to be awarded. This is our best estimate based on how we view the current tender processes we are in and what we are hearing from our customers.
Of course, that may change both positively and negatively, but it's our best guess at the moment.
Thank you. Can you elaborate on Nekkar's current approach to M&A? Are there any ongoing processes or opportunities under evaluation that could result in near-term activity?
Yeah, we have targets to both deepen our existing operating companies by adding more business to the existing companies and also to broaden the portfolio with new companies within our target areas. We have several processes ongoing at the moment and have also been part of several processes earlier on in the year. No one has been concluded as of yet. We are confident that we will be able to grow Nekkar as a group, also including M&A. With M&A targets, we look for solid companies with positive financial figures, which could add to our financial targets of our 2027 figures.
On that note, how is the acquisition of Globetech completed nearly a year ago progressing? What impact has it had on Nekkar's overall performance?
Yeah, I think with Globetech , we are very satisfied with the performance of the team and of the company. As you see of the financial figures, they deliver a steady growth in revenue combined with kind of 20%+ EBITDA figures. We also see Globetech as a platform to both grow organically with new customers and services, but also to grow inorganically by joining up with other key players in maritime IT business.
Thank you. Could you elaborate a little bit on the differences in the tendering processes for defense-related contracts for Syncrolift versus commercial ones? Are there any differences?
I think at least one key difference is, of course, the complexity or bureaucracy in award timing and award sign-off, as normally this includes some government approval. As we see in Norway, for instance, with Norwegian defense purchases, the timing of when to purchase new equipment is very difficult to predict. When it comes to the more commercial process, it's a lot of the same factors. Of course, we need to have the best technical solution, and we also need to be competitive on price.
Is the reason for not securing a major award this quarter the loss of awards, or that awards have not come to the market?
As far as we know, there have not been any awards that have been lost in the quarter or earlier on in this year. That's also why the total tender portfolio of Syncrolift is quite stable when you also take into account the roughly NOK 100 million we achieved now over the last couple of months.
In FiiZK, following the recently announced [Miljøflex] , what do you expect and see here going forward in the medium term?
Yeah, I think first, like you said, we had a very good Aqua Nor last week, which is kind of the key trade fair for product and technology providers for aquaculture. As highlighted in the presentation today, we see that several fish farmers, including Movi and Sinkaberg, as pointed to, are using post-smolt as part of their organic growth plan to grow biomass. Post-smolt in sea, by utilizing closed-cage aquaculture solutions from FiiZK, has clearly demonstrated its success with about 20+ deliveries from FiiZK over the last years. We expect that several fish farmers will utilize this strategy in order to continue to grow biomass.
Thank you. For Techano , these cost overruns on first build projects, can we expect that you have today taken the costs you are familiar with, or can we expect further sort of overruns in the quarters ahead?
Now in the second quarter, we have taken and booked all costs related to these two projects that we are aware of and known to us as of today. These two first projects are also now very soon to be delivered to the end client. Hence, the complexity and risk are reduced day by day. Having said that, of course, all such new build projects have some risk associated until it's finally delivered.
Thank you. On your 2027 target announced nearly a year ago, can you elaborate a little on what has happened since then and what you sort of see going forward? Can we sort of trust that you're progressing according to plan, or how should we think about this?
Yeah, I think that, of course, the $2 billion target is a mix of organic growth and inorganic growth. For the organic growth part, I think if you look a bit further beyond last quarter and this quarter, like we say with Syncrolift, for instance, we have a positive outlook in terms of growing the business. We also see that with the other operating companies in terms of growing revenue. Of course, that's part of, that's the majority share of the target. For M&A and inorganic growth, we have not succeeded with any signed deals so far this year. That's also due to the fact that we are quite cautious in terms of valuation and what type of companies and setups that we are involved in.
Having said that, we are pursuing multiple opportunities at the moment, and hopefully some of these, assuming they meet our investment criteria, will be able to be signed within this year.
Thank you. Switching to Intellilift, what are the key growth prospects to look for in this company going forward, and how do you plan to capitalize on the announced increasing market interest in drilling automation?
With Intelliwell, we have for now about over one year had very solid results from the first Intelliwell installation of automation to existing rigs, which TRANSOCEAN NORGE were the first contract. We have worked on several prospects since that time together with TRANSOCEAN, our JV partner, and we see now that there are multiple opportunities that are likely to be contractually firmed up within some months' time. This helps us to also demonstrate and capitalize on these significant investments that have been made by the Intellilift team in terms of developing new solutions for the existing drilling rigs market.
Thank you. On Syncrolift, would you say that the competition in tenders has increased given the high defense megatrends sort of working around us?
It's the same players that have been there for the last years, and of course, this is a very small competitive group of companies. I think, especially in the defense naval market, we feel that Syncrolift has a very strong track record and client-based reference list. We feel that our competitive position is unchanged from previous years.
Thank you. I think there are no further new topics or questions.
Okay, then I wish everyone a nice day and thank you for participating in this second quarter presentation for Nekkar. Please remember to sign up for the Capital Markets Day at the 13th of November at Syncrolift offices outside Oslo. Thank you.