Good morning, and welcome to the second quarter and first half presentation from Nekkar. My name is Preben Liltved, and I am the CEO. I am glad to share with you some business update, and by help of our CFO, Kristoffer Lundeland, second quarter and first half financials. Kristoffer will speak to the financial slides. In the past years, we have updated the market every six months. As informed during our Q1 operational update, we plan to continue to present financial results every six 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&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. A very solid second quarter. Next slide. On this slide and the two next slide is a recap of the previous presentation, just to make sure that all of you are fully up to date with the core of Nekkar. The foundation of Nekkar business is superior engineering, electrification, automation and digitalization competence, and a heritage from Drilling Bay in Kristiansand. This is competence that have helped to convert the global offshore drilling and lifting industry, which relied on huge amount of manpower and manual operations to become a lean, fully automated and digital services remote control with hardly any manpower on deck.
In addition to digital and development projects in Kristiansand, we have Shipyard Solutions, or Syncrolift, located in Vestby, designing, manufacturing and delivering complete ship lift and transfer systems. Next slide. Nekkar aim to apply this competence as lever to develop disruptive technology that can make high-growth industry sectors such as aquaculture and renewables even more sustainable, productive and profitable. This will benefit fish farmers, operators of wind farms and others to reduce environmental footprint as well as lower operational costs, thereby making this industry even more sustainable and future-proof. Next slide. Today, Nekkar consists of three areas, Shipyard Solutions with our brand, Syncrolift; 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 Nekkar's business area.
The unique combination of the disruptive technology and automation sensor legacy will be the building blocks for future SaaS offerings for Nekkar. Next slide. We move to business area Shipyard Solutions. As you can see on the screen, this is a recent photo from our new building here in Vestby, where we move in in March this year. We are also building workshop, test facility and warehouse at the back of this building as we speak. The plan is actually to move some of the assembly and testing commissioning work to our own facility. By the new location, we have prepared for the future for possible expansion and in a very modern facility. Next slide. We have completed and successfully commissioned three project 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 ship lift and transfer system to Pakistan. We have finished commissioning on a third-party ship lift with Intellilift and Syncrolift for control system in Qatar. In addition, we have finished and commissioned the first batch of trolley for U.S. in a huge project which will be ongoing for the next 2- 3 years. Was this batch from the facility here to U.S. before vacation. On top of this, we have had engineers in Singapore, Tunis, and Algeria for commission on ongoing project. With all this global activity ongoing in a world full of travel restrictions and COVID has been extremely challenging. We have managed thanks to our dedicated and loyal engineers in both Syncrolift and Intellilift. Next slide. As earlier 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 our 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.
Yeah. A quick look at some historical key financial figures. Experienced in the last periods, higher activity in the second half of the year as more projects have been finalized. As Preben said initially, we have finalized three projects in the first half of 2021, and in general, seen very high activity on the new building side of Shipyard Solutions. As you can see on the chart, we have two consecutive, very strong half-year performances. The last 12 months revenue is approximately NOK 430 million, with a strong operational EBITDA of NOK 120 million. 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 first and second quarter order intake, as you can see. No order intake for longer period is not abnormal 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 3-4 tender closed every year, and we have normally, historically, taken minimum two of them. We have also seen year where there has been no closed 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. 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 and August, we have secured three 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 30-year Syncrolift.
This will be a joint project for Intellilift and Syncrolift. In August, we signed a major spare parts order in Singapore for repair of a damaged ship lift, and we have also sold a nice batch with trolleys from our stock from a previous project, which will be delivered now, most probably in Q3 already. This order prove that we are moving in the right direction with our service project and that customer trust us as a global partner. Next slide. We jump to Starfish and Aquaculture. This picture is actually taken only two weeks ago, and the Starfish pilot cage have now been in the water for five 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.
Aquaculture, and especially aquaculture related to salmon, is a very interesting market, and things are happening, and it's happening rather fast for the moment. In July, the Norwegian government launched their strategy document, An Ocean of Opportunity. The document focus on further development and increase of sea farming in Norway in more general terms. The document also show that there is need for a change to develop certain areas into more automated, digitalized, and sustainable solution to reduce footprint and increase fish health and welfare. The document shows that the government will incentivize innovation for both open sea farms, closed system in sea, and systems on land. Two 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. In summary, there's three criteria: no sea lice 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 probably 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, I brought it back because keeping in mind what's said on the previous slide from the Minister of Fisheries. Starfish will fulfill all criteria related to the new permits. No lice, dual safety against escape, and possibility to collect the waste. Next slide.
Focus in our first stage of testing has been physical strength of the case and systems related to the first circulation unit. We will, in August, install another three 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. We jump to renewables. Small update on SkyWalker. We had a quite comprehensive presentation of SkyWalker 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 bi-weekly meetings with them and discussions to give us important insight in installation challenges, both related to design and operation of SkyWalker, 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. We have, during the past months, qualified our calculation related to efficiency, footprint, towards major wind turbine companies. We have also seen that SkyWalker land version, which is under design now, later can play an important role in both bottom fixed and floating windmill installation processes.
The news a few weeks ago that Vestas Ventures have invested in a Swedish company called Salamander, which have a more simple but interesting lifting device as well, show that the biggest players in the wind industry are eager to see new installation solutions and technology come to the market. Next slide, please. As earlier informed, we have received funding of NOK 24 million from Innovation Norway to support for design, prototype production, and testing of the first SkyWalker. We are now in good progress of design and planning for a downscale model test within this year. By this, we will test both the mechanical property, but also the digital remote control platform, which is essential in the whole function of SkyWalker. Full-scale production and testing will start probably late 2022 or early 2023. Next slide.
Yeah. Preben has already touched upon some of the financial highlights for the period, I'm going to go a little bit deeper into the figures. As Preben said, we had very high activity in the second quarter with revenues at NOK 122 million, 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 million compared to NOK 130 million in the previous year. Again, the main revenue driver within Nekkar is our new building business and Shipyard Solutions, where we have experienced good progress in several projects and also finalized the three projects, as Preben has already said. The second quarter operational EBITDA, which does exclude gains or losses on foreign exchange hedging contracts, ended at NOK 39 million in the second 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. We have also from the three project that has been finalized in the 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 million, compared to NOK 27 million in 2020. A note here that the reported EBITDA in 2020 was highly impacted by a NOK 12 million gain on FX hedging contracts. Our order backlog is still sitting strong at NOK 975 million at the end of the second quarter, and as Preben said, that does represent and give us a solid operational foundation for future periods.
We continue our R&D investments, and the capitalized development costs amounted to NOK 14 million in the first half of 2021, compared to NOK 2 million in the same period last year. These R&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 million 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 Cargotec and MacGregor arbitration, which resulted in a payment of around NOK 98 million, which was done in the first quarter of 2021.
The group has no financial debt, 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 million in the first half of 2021, compared to a negative cash flow of NOK 4 million in the first half of 2020. 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 new building 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.
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. That's also what you can see from the audited figures in 2020, where the changes in net working capital was positive with around NOK 57 million. Looking at cash flow from investing activities was negative with NOK 115 million in the first half of 2021. As I said in the previous slide, that was mainly due to the settlement of the Cargotec/MacGregor arbitration along with related expenses. R&D expenditure amounted to a total NOK 14 million, in addition to acquisitions and related to fixed assets as part of the change of headquarter in Syncrolift. The total cash flow for the first half was negative with NOK 168 million.
The company still has a good liquidity position with bank deposits sitting at around NOK 200 million at the end of the second quarter. Next slide.
Thank you, Kristoffer. I want to summarize the presentation. This is Nekkar today. We have unique competence that are automated and digitalized in the 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 in the new sectors. We have a flexible business model, and we have a financial toolbox available to support us if and when required. Next slide. To summarize, we have delivered a very strong quarter. Our balance sheet remains strong, so does our order backlog. The development project, Starfish SkyWalker, is ongoing and in accordance with 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 Shipyard Solutions, we have already landed large service software contracts in Q3. It's been a key focus going forward. We are also bidding for an attractive new building project, which we believe we have a good chance of winning. The total intake will not be as 2022. However, we foresee a new project in the second half. The latest news from the 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 a more sustainable business. Of course, these new permits coming out will accelerate the interest of closed systems in sea. Our digital business has still solid leads on drilling software-as-a-service project. We strongly believe this will be materialized. Exactly when is still uncertain. We thank you for attending the presentation today.
With that, we open for questions from viewers.
Good morning, everyone.
Thanks.
Good morning. Preben, you have already touched on this question.
I think it's worth repeating.
It's a question about contract awards for Syncrolift or Shipyard Solutions. Are Syncrolift contract awards simply delayed due to COVID-19, 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. We don't know any projects that have been canceled. It's just a matter of getting together. This is one of the 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 from oil and gas and marine market where you build a drilling rig or a vessel every year or every second year. This is one-off projects and a long planning period and new for everyone. We have not seen any cancellations. It's just that the process has stopped. We see now that it is moving again.
We have had travel activity on project in June, and we have also activities going on for the moment. 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? Are there also opportunities in the Chilean markets?
Definitely, yes. I mean, the backbone of Nekkar is export. That's what we have been doing for our lives, and that is what we want to do in the future as well. For Starfish, there is, of course, a big market in Norway, but it's also a big market globally. We have seen now with what's happening 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 in Chile, the problem they have had faced this year and last year actually with RDS. There is interest. 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 is approximately 50% of the global market.
It's a huge market in our neighborhood, and it's a good way to start.
I think that answer is a good introduction to the next question. When will Starfish be ready for customers?
Yeah, that's a good question. We are not far away. As we said, we have very important tests to be done now in August and September. Basically what we have said before and which is still valid is that we will start commercializing Starfish within this year. Then it's of course a lead time and delivery time, but basically Starfish will very soon be available in the market. 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 cage farming.
Thank you. I guess this question could be answered by Kristoffer or maybe you, Preben. 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?
Yeah. 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 outlined there in a more detailed way. I would like to stress that it is not a one-off. The project in Syncrolift 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 three 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.
Looking at a longer time period, for example, six months, may be a better way of give a better view of the financial performance.
Thank you, Kristoffer. 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 misunderstandings, I think it's worth repeating the answer. It's the question about, can you please explain a bit more about the strong change in the working capital, specifically investment activities in the quarter?
Yeah. You're looking at the change in working capital in terms of our cash flow from operating activities, I guess.
Yes, probably.
That was the question, yeah.
Yeah.
Well, basically, as I said, in our new building project, we do receive prepayments upfront, meaning that we are normally cash positive in the projects from start to finish. 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. 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. Therefore, you may have quite large deviations between revenue and profits being recognized and when the actual cash has been incoming.
Thank you.
I'm not sure if that answered the question.
I think it was a very good answer. Thank you. A couple of questions about Shipyard Solutions and the backlog. I guess, Preben, this is for you. How long will it take to complete the current order backlog? What would you say is a reasonable backlog to have in a business like yours?
We have a very healthy one now, and actually, the majority of the backlog will be delivered within 2022/2023. We also have a very long-term contract towards USA, which will probably be ongoing also in 2024. We have, I must say, 3- 4 projects out of the 12 which we estimate to complete this year. It is hard to say because we have a world out there which gives us some headache. If things go as planned, we will have three or four projects completed in the second half and then the rest in 2022 and some in 2023 and even some small portion to 2024.
Thank you. Kristoffer, a question to you. The topic you have 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. 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 Preben also touched upon with the COVID-19 pandemic ongoing and delays which may happen within the projects. Having said that, we do expect high activity also going forward. 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? Why doesn't the company acquire the rest of Intellilift? Preben, I guess that's for you.
Of course, as you probably all know, we have a 51% ownership of Intellilift, and for the moment, we are working very closely with them, and they are a very important part of Nekkar. It's progress, and I can't say anything more about that. What we want to do or will do or are going to do. Yes, we are using Intellilift as basically our own company, and they are very integrated in everything we do in Shipyard Solutions, in Starfish and SkyWalker. They also have their own business towards other direct customers.
Just to add to that, as we have been touching upon, we have high beliefs for both our Starfish and SkyWalker solutions. Capital will also go into the developing of those solutions going forward as well.
Thank you. By that, you answered the question about capital allocation, Kristoffer. Thank you very much. A question about Starfish, Preben. Have you started biomass testing for Starfish?
No, we have not done that, and how important and how fast we should do it, we are in discussion with potential partners for testing with biomass. First of all, now we need at least August, September, maybe October, to make sure that the complete circulation system is working properly. Then it is actually not so much up to us because to put fish in a cage is not up to everyone to do. You need a permit to do that, and we need to do this together with one of our potential customers. 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.
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, Preben. I think that covers all the questions we have today. By that, I think we will conclude the webcast. Of course, if there are any more questions, you can email them directly to ir@nekkar.com, and we can respond directly to you following the presentation. With that, thank you for attending today, and have a good rest of the day. Thank you, Preben and Kristoffer.
Thank you. Bye.
Thank you. Bye.