Good morning, and welcome to the 2nd quarter and first half presentation from Nektar. My name is Pammi Littberg. I'm the CEO. I'm glad to share with you some business update. And by help of our CFO, Christophe Lundlund, 2nd quarter and first half financials.
First, I will speak to the financial slides. In the past years, we have updated the market every 6 months. As informed during our Q1 operational update, we plan to continue to present financial results every 6 months and a more light operational update in between. Please note that you can send questions through the webcast, and we will have a Q and A session at the end of the presentation. Next slide.
We are pleased to present key figures and happenings for Q2. And as you can see, very solid figure with growth both on top line and bottom lines. Subsequent of the period, We have also solid growth in order intake for service. Our development projects, StarFish and Skywalker are moving forward in accordance to plans, and we will come back to more details later on in the presentation, but a very, very solid second quarter. Next slide.
On this slide and the two next slide, I is a recap of the previous presentation just to make sure that All of you are fully up to date with the core of Nektar. The foundation of Nektar Business It's superior engineering, electrification, automation and digitalization competence and the heritage from Brilou Bay in Kristiansand. This is competent that I've helped to convert the global offshore drilling and lifting industry, which relied on huge amount Manpower and Manual Operations to become a lean, fully automated and digitalized remote control with hardly any manpower on deck. In addition to digital and development projects in Kristiansand, We have Shipyard Solution or Syncholift located in Westby, deciding manufacturing and delivering complete shiplift and transfer systems. Next slide.
Nektar aim to apply this competence as a level to develop disruptive technology that can make high growth industry sectors such as agriculture and renewables, even more sustainable, productive and profitable. This will benefit fish farmers, operators of wind farms and others to reduce environmental footprint as we expect lower operational costs, thereby making this industry even more sustainable than future proof. Next slide. Today, Nektar consists of 3 areas: Seaport solution with our brand Syncholift Aquaculture with our closed cage starfish and renewables with our lifting tool, Skywalker. At the core of this business model is our digital solutions area with the company Intellilift, which apply world leading digitalization automation competence across all Neka's business area.
The unique combination of disruptive technology and automation sensor legacy will be the building blocks computer SaaS offerings for Nektar. Next slide. Then we move to business area, shipyard solution. And as you can see on the screen, this is a recent quarter from our new building here in MSP, where we move in, in March this year. We're also building workshop, test facility and warehouse at the back of this building as we speak.
And the plan is actually to move some of assembly and testing commissioning work to our own facility. By the new location, we have prepared for the future for possible expansion in a very modern facility. Next slide. We have completed and successfully commissioned 3 projects during this period. It has been a busy quarter with ongoing commissioning work in Qatar, Singapore, Pakistan, Tunis, Algeria and Norway.
We have completed handover of complete shiplift and transfer system to Pakistan. We have finished commissioning on a 3rd party shiplift with Intellift and Zincolift for control system in Qatar. In addition, we have finished and commissioned the 1st batch of trolley for U. S. In a huge project, which will be ongoing for the next 2 to 3 years was dispatched from the facility here to U.
S. Before vacation. On top of this, we have had engineers in Singapore, Tunis and Algeria for commissioning an ongoing project. With all this global activity ongoing in a world full of travel restrictions and COVID has been extremely challenging. But we have managed time to our dedicated and loyal engineers in both Syncholift and Intalyift.
Next slide. As early informed, we started a service project in 2019 in Shipyard Solutions to generate growth and boost customer interaction globally. This journey has Show us how important it is with a well operating service and after sales organization. The service focus will continue, and we will gradually take overall share of this important market. Further developing our network with our customer in focus will continue to grow over the next years.
Next slide, please.
Yes. And then a Experienced in the last periods higher activity in the second half of the year as more projects have been finalized. However, as Pervin said initially, We have finalized 3 projects in the first half of twenty twenty one and, in general, seen Very high activity on the newbuilding side of Shipyard Solutions. So as you can see on the chart, we have 2 consecutive Very strong half year performances. And the last 12 months revenue It's approximately NOK 430,000,000 with a strong operational EBITDA of NOK 120,000,000.
Next slide.
I'll speak a little bit about the backlog and the order intake. As informed, the order intake for 2021 will be lower than our record high intake in 2020. This, in combination with travel restrictions and delay in decision making due to COVID, have impacted both 1st and second quarter order intake, As you can see, no order intake for longer period is not a normal for our business. We have seen the same in the past. Most important is that we have not lost any tender.
In the first half, there have just not been any tender and the market is still there. In average, over the past 10 years, we have seen 3 to 4 tender closed every year, And we have normally historically taken mainly 2 of them. But we have also seen here that there has been no close tender at all. We are bidding for project for the moment. We have also started up sales and marketing Traveling again, and we think that there will be closed project within second half of this year.
However, our backlog is still strong, and we have many projects to deliver. The workload in engineering project and commissioning departments are still very high, But we are in good shape to take new project in Q3 and onwards. Next slide. As said, we have had some busy summer in the service department and have Some subsequent orders coming in, which we would like to inform about. In July In August, we have secured 3 important sizable upgrade and spare parts orders, increasing our backlog for service.
In July, we signed a nice complete upgrade job in Spain for drive and control system for a 20 all year SynchroLift. And this will be a joint project for IntelliLift and Syncholift. In August, we signed a major spare parts order in Singapore repair of a damaged shiplift. And we have also sold a nice batch with trolleys from Overstock from a previous project, which we believe will now most probably in Q3 already. These orders prove that we are moving in the right direction with our service project and that customer trust us as a global partner.
Next slide. Then we jump to starfish and aquaculture. This picture is actually taken only 2 weeks ago, and the starfish pilot cage have now been in the water for 5 months. We have gained lots of experience over this time. And in August, we are entering into next phase of testing of StarFish.
Next slide, please. Aqua culture and especially A concurter related to Salveen is a very interesting market, and things are happening, and it's happening rather fast for the moment. In July, the Norwegian government launched the Bayer strategy document, an option of opportunity. The document focused on further development and increase of seed farming in Norway in more general terms. The document also showed that there is need for a change to develop certain areas into more automated digitalization and sustainable solution to reduce footprint and increase fish, health and welfare.
The documents show us that the government will incentivize innovation for both open sea farms, closed system in sea and system to land. 2 days ago, The Norwegian Minister of Trade, Industry and Fisheries also announced plan to establish new permit scheme in order to Solve environmental challenges and be able to use new areas along the coast. There will be strict requirements for these permits and in Summarize, there's 3 cut areas. No sea lies to the environment from the farm, minimum 60% of waste to be collected and high degree of safety against escapes. The level of new technology and innovation will We also have influence on how this permit will be distributed and sold.
We look at the last Happening from this week as a major breakthrough for closed systems in sea. Next slide. This is also a slide from our last presentation, but I Got it back because keeping in mind what's said on the previous slide from the Minister of Fisheries. Starmage will fulfill all criteria as related to the new permits: no lies, Dual safety against the scale and possibility to collect the waste. Next slide.
Focus in our first The age of testing has been physical strength of the case and systems related to the 1st circulation unit. We will, in August, install another 3 circulation units and filter for sorting of waste. Testing of this will be ongoing for the rest of the year. In parallel, we have started production of a full scale version, which should be ready for testing very early in 2022. We are satisfied with our design.
The behavior of our flexible solution has proven to withstand external forces from waves, wind, rain and current. Next slide. Medium to renewables, small update on Skywalka. We had a quite comprehensive Presentation of Sky Hawker during Q1 session, but a small update here. It's going on.
We are doing design In close cooperation with our innovation partners, we have weekly meetings, with them and discuss and discussions to give us important insight in installation challenges, both related to design and operation of SKYY WOKEN, but also related to the environment and weather issues related to installation. We are entering into detailed discussions with our partners in an early design phase, which give us valuable knowledge early on in the project. Next slide. The important design criteria still play a major role in And we have, during the past months, qualified our calculation related to efficiency, footprint towards major wind turbine companies. We have also seen that Skywalkers and Wirtgen, which is under the cyanode, Later can play an important role in both bottom fixed and floating windmill installation processes.
The news a few weeks ago that Vestas Venture have invested in a Swedish company called Salamander, which have a More simple but interesting lift in devices where show that the biggest players in the wind industry are eager are to see new installation solutions and technology come to the market. Next slide, please. As earlier for, we have received funding of NOK 24,000,000 from Inmacun and Orbi to support for design, production and testing of the 1st Skywalka. We are now in good progress of design and planning for a Dome Scale Model Test Within This Year. This will by this, we will test both the mechanical property but also the digital remote control which is essential in the whole function of Skywalker.
Full scale production and testing will start probably late 'twenty 2 or early 'twenty 3. Next slide.
Yes, yes. Kebben has already touched upon some of the financial highlights for the period, but I'm going To go a little bit deeper into the figures, and as Praveen said, we had very high activity in the second quarter With revenues at SEK 122,000,000 representing a growth of around 90% compared to the Same period last year. If we look at the half year of 2021, revenues were NOK 250,000,000 compared to NOK 130,000,000 in the previous year. And again, the main Revenue driver within Nektar is our new building business in Shipyard Solutions, where we have experienced good progress in several projects and also finalized the 3 projects, as Pravin has already said. The Q2 operational EBITDA, which does exclude gains or losses on Foreign exchange hedging contracts ended at NOK 39,000,000 in the 2nd quarter, representing an EBITDA margin of roughly 32% in the quarter.
The operational EBITDA improvement from 2020 is, again, Due to high activity in Shipyard Solutions and we have also from the 3 project that has been finalized in a period. We have been able to realize project cost savings, Basically meaning that we have finalized the project at a lower cost than what we previously estimated. Looking at the reported EBITDA in the second quarter ended at NOK 38,000,000 compared to NOK 27,000,000 in 2020. A note here that the reported EBITDA in 2020 was highly impacted by a €12,000,000 gain on FX hedging contracts. Our order backlog is still sitting strong at NOK 975,000,000 at the end of the second quarter.
And as Perben said, that does represent and give us a solid operational foundation for future periods. Again, we continue our R and D investments, and the capitalized development costs That amounted to NOK 40,000,000 in the first half of twenty twenty one compared to SEK 2,000,000 in the same period last year. And these R and D investments are mainly related to our Starfish and Skywalker Solutions, along with product development going on in the digital solution business area. Next slide. A quick view on the balance sheet Show that the company are in an overall good position, as can be seen On the total asset side, our bank deposits amounted to NOK 200,000,000 at the end of the second quarter, which is roughly 50% of the total assets.
You can see the decline there from the December figures. That is mainly due to the settlement of the Cargo Track Tech and MacKagg arbitration, which resulted in a payment of around NOK 98,000,000 in which was done in the Q1 of 2021. The group has no financial debt, and the equity ratio is roughly 60% at the end of the second quarter compared to 43% in the same period previous year. Next slide. The cash flow statement shows that we have a operating cash flow, which were negative with around NOK 51,000,000 in the first half of twenty twenty one compared to a negative cash flow of NOK 4,000,000 in the first half of twenty twenty.
And the negative operational cash flow may look large, but this is due to the fact that We, to a large extent, receive prepayments on our newbuilding project in Shipyard Solutions, Basically meaning that we get a large amount of prepayments in previous periods and that we start to recognize revenue in those projects Once we are working on the projects and costs from sub suppliers are incurring. So that's normal for our business that cash received normally comes first, And then we book the revenue later. So it normally won't be in the same period. And that's also what you can see from the audited figures In 2020, where the changes in net working capital was positive with around SEK 57,000,000. Looking at cash flow from investing activities was negative with NOK 115,000,000 in the first half of twenty twenty one.
As I said in the previous slide, that was mainly due to the settlement of the Cargo Tech MacGregor arbitration along with related expenses. R and D expenditure amounted to total SEK 14,000,000 in addition to acquisitions and related to fixed assets as part of the change of headquarter in St. Collett. The total cash flow for the first half It was negative with NOK168,000,000. However, the company still has a good Liquidity position with bank deposits sitting at around NOK 200,000,000 at the end of the second quarter.
Next slide.
Thank you, Christopher. I want to summarize the presentation. And this is Nektar today. We have a new competence that are automated and digital sales and industrial auto sectors, and we want to do it again. As we have explained, we cooperate with very strong industrial partners to fast track the adoption of this unique competence and technology into new sectors.
We have a flexible business model, and we have financial toolbox available to support us if and when required. Next slide. So to summarize, we have delivered a very strong quarter. Our balance sheet remains strong, so does our order backlog And the development project Starfish Skywalker is ongoing and in accordance to plans. You can see the outlook on the right hand side where we have ticked off some yellow marks on the parts that is partly or fully achieved.
Within the CPL Solution, we have already landed Large service of bed contracts in Q3, and it's been re key focus going forward. We are also meeting for a tractor newbuilding project, which we believe we have a good chance of winning. But the total lintag will not be as 2022. However, we or see project, new project in second half. The latest news from Norwegian government and the minister related to permits is very Promising for us and actually something we have been waiting for to turn sea farming into more sustainable business.
And of course, these new permits coming out will accelerate the interest of Closed Systems in C. Our digital business has still saw the lease on drilling software as a service project, And we strongly believe this will be materialized, but exactly when is still uncertain. We thank you for attending the presentation today. And with that, we open for Questions from viewers?
Good morning, everyone. Good morning. So, Pravin, you have been you are going to touch on this question, but I think it's worth repeating. It's a question about contract awards for Synco Lift or Shipyard Solutions. Are Synco Lift contract awards simply delayed due to COVID-nineteen or have they been canceled?
In other words, are you expecting that the contracts that weren't awarded in the first half, That they are pushed forward and awarded in the second half of the year instead?
Basically, we are working on the same leads and tenders now, Like we did at the beginning of this year, it's just that no decision has been taken. So we don't know any projects that have been canceled. It's just a matter of getting together. This is one of huge infrastructure and development projects. And there is Contractors and suppliers from many different countries, and it's a one off project.
This is not like we are used to for oil and gas and marine market where you build a drilling rig or a vessel every year or every This is one off project and with a long planning period and new for everyone. So we have not seen any cancellations. It's just that the process has stopped. And we but we see now that it is moving again. We have had travel activity on project in June, And then we have also activities going on for the moment.
So we see that things are starting to move again.
Thank you. Question about StarFish. For StarFish, is the interest from potential customers Only in Norway or are you seeing potential partners in other important salmon markets such as Scotland, Canada and Faroe Islands? And are there also opportunities in the Chilean markets?
Definitely, yes. And I mean, the backbone of Nektar It's export, and that's what we have been doing for our lives, and that is what we want to do in the future as well. So for staff is there is, of course, a big market in Norway, but it's also a big market globally. And we have seen now with what's in Canada, where the government there also have come with very strong regulations related to open cages and there will be a change. We have had discussion with customers in this market.
We also see now with Kiele The problem they have had faced this year and last year actually with the Agias. So there is interest. But of course, we are still early. We need to Be sure that what we do is correct. We will handle live fish and market in Norway nearly 50% of the global market, so it's a huge market in urban Edward, and It's a good way to start.
I think that's a good that answer is a good introduction to the next question. When will Starfish be ready for customers?
Yeah, that's a good question. And we are not far away. As we said, we have very important tests to be done now in August September. And Basically, what we have said before and which is still valid is that we will Start commercializing StarFish within this year. And then it's, of Also, a lead team and deliberate type, but basically, stoppage will very soon be available in the market.
And we have Lots of discussion with potential customers. They know us. We have also had important customers at site looking at our prototype, And the feedback so far is that it looks like a very solid and flexible solution for closed case
Thank you. I guess this question is for could be answered by Christophe or maybe you, Pravin, but I'll let you choose. Congratulations to all the team for a fantastic result. Could you please give us more color About the margin expansion we saw in this quarter, is it a one off?
Yes. I can give a brief comment to that. For those of you that looked into our Annual reports, and you can see the accounting principles are our own outline there in a more detailed way. I would like to stress that it is not a one off. We the project in SincroLift Are being recognized as a percentage of completion, meaning that There are estimates of costs and revenues that are performed and reviewed on a monthly basis.
And in this case, we came in and completed 3 projects in the period at a lower cost than what we had Previously estimated, and that effect was recognized in the second quarter. But as I've said in also previously quarterly updates, if you look at our results from a quarter to quarter basis, It may fluctuate quite significantly. So looking at a longer time period, for example, 6 months, may be a By the way of give a better view of the financial performance.
Thank you, Christoph. There is another question here that I know you touched upon in the presentation, but I think in order to ensure that there were no Standings, just I think it's worth repeating the answer. It's a question about can you please explain a bit more about the strong change in the working capital, Specifically, investment activities in the quarter.
Yes. You're looking at The change in working capital in terms of our cash flow from operating activities, I guess. Yes. That was the question, yes. Well, basically, it's, as I said in our newbuilding project, we do receive prepayments upfront, Meaning that we are normally cash positive in the projects from start to finish.
So we are running the business on a negative working capital, which again means that we don't have any funding requirements. We don't have any external debt. So the business model in cash wise means that we get the cash First, and then we start recognizing revenues once costs are incurring in the projects. So therefore, you may have quite large deviations between revenue And profits being recognized and when the actual cash has been incoming. I'm not sure if that answered the question, but
I think it was a very good answer. Thank you. A couple of questions about Shipyard Solutions On the backlog, and I guess, Praveen, this is for you. How long will it take to complete the current order backlog? And then what would you say is a reasonable backlog to have in business like yours?
Now it's I mean, we have a very healthy one now and we have actually majority of the backlog will be delivered within 20 The backlog will be delivered within 'twenty two, 'twenty three, but we also have a very long term contract towards USA, which will probably be ongoing also in 'twenty four. We have, I will say, 3 to 4 projects out of the 12, which we estimate to complete this year. However, it is hard to say because we have a world out there which give us some headache. But If things go as planned, we will have 3, 4 projects completed in second half and then rest in 'twenty two and some in 'twenty three and even some small portion to 'twenty four.
Thank you. Christopher, a question to you. It's a topic you've already touched upon, but worth repeating. Could you talk a little bit about seasonality within Shipyard Solutions? Previously, it has been very Q4 loaded.
Has the COVID pandemic affected seasonality or should we still expect strong end of year performance?
As I said, the business itself is not a typical seasonal business. Having said that, we do have experienced higher activity in the second half. But the first half, we had very high activity all across the board. In terms of guiding for the second half, we don't guide on detailed numbers there, as Prenben also Touched upon with the corona pandemic ongoing and delays which may happen within the projects. Having said that, we do expect high activity also going forward.
So, but if the second half will be How that will be compared to the first half, I cannot really say.
Thank you. A question here. How does the company intend to allocate capital going forward? For example, is the management looking for acquisition targets? Or why doesn't the company acquire the rest of Intelliift?
Kebben, I guess that's for you.
Yes. Of course, as you probably all know, we have a 51% ownership of Telest. And for the moment, we are Working very closely with them, and they are a very important part of Nektar. And It's a progress and I can't say anything more about that, what we want to do or will do or going to do. But yes, we have we are using Intellit as basically our own company, and they are very Great in everything we do in Secure Solutions, you need Starfish and Skywalker.
But they also have their own business towards other direct customers.
Yes. And just to add to that, I mean, as we've been touching upon, we have high beliefs for Both our StarFish and SkyWalker solutions, so capital will also go into the to the developing of those solutions going forward as well.
Thank you. And by that, you answered the question about capital allocation, Christoph. Thank you very much. A question about starfish, Pravin. Have you started biomass testing for starfish?
No, we have not done that. And how important and how fast we should do it, we Our discussion with potential partners for testing with biomass. But first of all, no, we need at least August, September, maybe October, to make sure that the complete circulation system is working properly. And then It is actually not so much of to us because to put fish in a cage is not up to everyone To do, you need permit to do that, and we need to do this together with one of our potential customers. And then it's timing wise, what should we do?
And should we do it in the small one we have now? Should we wait for The full size coming early next year, that is discussions which we are having together with our innovation partner and also together with others. So it's hard to say and give a date on when we will do it. It might be this year, it might be early next year.
Thank you, Pravin. I think that covers all the questions we have today. And by that, I think we will conclude the webcast. Of course, if there are any more questions, you can email them Directly to irnecar.com, and we can respond directly to you following the presentation. But, with that, thank you for attending today and have a good rest of the day.
Thank you, Preben and Kristofer.
Thank you. Thank you. Bye bye.