Good morning, and welcome to this operational update from Nektar. My name is Pramit Lippewed, and I'm the CEO of the company. Today's presentation will be primarily an operational update. However, we will also share some key financial figures, which our CFO, Christoph Onderland, will present later. In the past years, we have updated the market every 6 months.
Our plan going forward is to provide a full financial update every 6 months, but also some financial figures and operational update every quarter. Please note that after the presentation, you can ask questions through our webcast. All Q and As will be after the presentation. Next slide. Please note the disclaimer.
So some highlights from Q1. We had a revenue of NOK 93,000,000, which is up 40% compared to Q1 last year. We had an operational EBITDA of SEK 17,000,000, A margin of 18%, up from about SEK 5,000,000 Q1 2020. We still have a healthy and solid backlog of more than SEK 1,000,000,000 at the end of the quarter. We also did startup of our ocean test of the prototype of Stavish growth case in the quarter and Secured 21,000,000 soft funding from Innovation Norway for Robo Skywalka, the turbine installation tools.
We had no new build project intake in Synchroix in the quarter. However, we secured a 5 year service agreement, which We will go back to later. In addition, we deliver an environmental friendly ship lift to Skarvik in Norway, which we also will discuss later on in the presentation. Next slide, please. For the benefit of new shareholders watching this presentation, I want to quickly repeat who we are.
In 2020, Nekka defined a new strategic direction. The foundation of Nekka's business It's superior engineering, electrification, automation and digitalization with a heritage from the drilling bay in Kristiansand. Remember, in this competence that helped to convert the global drilling and lifting industry, which relied on huge amount of manpower and manual operations to be fully automated and digitally safe and remote controlled with hardly any manpower left on the drilling deck. In addition to our digital and development projects in Kristiansand, we have the CPR solution or SyncroLift Here in West B, designing and manufacturing complete shiplift for and transport system for the global market. Next slide.
Nneka aims to apply this competence 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 farmers, operators of wind farms and other through reduced environmental footprint as well as Significantly, reduction of operating costs. Therefore, making these industries and others more sustainable and Future Proof. Next slide. Today, NECA consists of 3 business areas: CPF solution, aquaculture and renewables.
At the core of this business model is our digital solution, including Intelli, we supply We're leading digitalization and automation competence across all The technology, automation and remote control systems will be building blocks for future SaaS revenues and offerings for Nneka. Next slide. Then we jump to our different division and start with some updates On the AquaCurve side, the photos you see here is The photo you see here is taken from IDA and it is the prototype of stuffage, which came into the water early March this year. Next slide. World population are increasing and so do the need for fish and propane.
Sustainable growth should be done by innovation in new technology. We look at land based, Offshore and closed systems all will contribute and develop to increase production of Atalka. Automation and digitalization will be important for development of all these different technologies in the future. Next slide. So why Starfish?
We believe that closed systems in CE will be a major contributor to the growth in the aquaculture industry. To eliminate and minimize life's problem and escape, it's needed to enable further growth for Salveen Aquaculture Norway today. Combining these five possibilities for waste collection and increased use of digital systems We dramatically reduce OpEx. Also, energy construction on closed systems And especially in Southeast, I consider significant lower than land based system. Next slide.
So where do we are in the testing? We are still early in the testing of StarFish, But we are now testing our engineering approach towards the green environment. Wind, wave, current, Rain and snow will challenge our systems and components, but we are sure we need to prove that we are on the right track. During the 1st 2 months of testing, we have seen positive results. And Also, we have had visitors at site from the major aquaculture companies.
However, we still have lots of testing to do and testing will continue all during this year, 2021. Next slide. Development of our new software platform, Aquarius, Neka and Intellif will take a position as an integrator, optimization and visualization of our Aquaculture Systems. Again, we are basing our technology on proven software from oil, gas Renewables and develop this further into agriculture. This is what we have done for years.
By proving this in a mixed reality system, a combination of camera and analytic data, The daily life of farmers will change to the better. Artificial intelligence and machine learning will enable us to improve efficiency and reduce Costs. Next slide. So we started StarFish 2 years ago. We completed the test in Sintef tank last year And we are now progressing on the test for in HIDA for the prototype.
And our plan is to start testing of our full scale version at the end of the year or early next year. We have positive signals from major aquaculture players as we speak for our own technology. Next slide. Then we jump to our renewables. And in early 2020, we started development of an installation tool for land based windmills, later named SkyWalker.
Next slide. At the start of this project, 3 main challenges were highlighted from our innovation partners and future possible customers. Crane size and availability He limits the development of larger and higher windmills onshore and to build more efficient turbines and parks. The environmental footprint should be minimized and the weather window for installation Due to wind and bad weather, this should be improved. So all this was the basis for developing our forward installation to the Skywalkers.
Next slide. This will show you a typical crane solution for installation of windmills, approximately 150 meter highs and 5 to 6 megawatt. And this is the technology used today. And as you can see, massive constructions,
which need
to be transported in pieces and assembled at the different sites. Next slide. This is a number of truck needed to transport 1 of these crane to the site. And in addition to transportation, this crane also need to be partly dismantled in between each Installation job on each windmill. So this way of installation start to become a major Environmental issue, both when it comes to CO2 emissions, but also the footprint this type of machinery needs at the windmill park sites.
So up to 80 trucks for 1 crane. Next slide. This is the need for SKYY WONKA. So When we succeed developing SKYY VONKOL, we need approximately 8 to 10 trucks to transport the same tool, which can install the same wheelman as The other normal traditional crane will need up to 80 trucks to do. Next slide.
As earlier said, we received a funding of more than NOK 120,000,000 from Invesco Norge to Supported design, prototype production and testing of our first SkyWalker. We are now in good progress of design and planning Model test of a dome scale model this year, in addition to do proper testing of the software platform, of course. Full scale production and testing will be next year. Now we have a video which hopefully make you understand better The host Sky Bokke will operate and I can do it by a presentation. So please start the video.
So as you see, Skywalka It's a machine mounted on the windmill itself. You need once more crane to erect the first tower And then the machine will do the rest of the installation by itself with the help of small cranes supported on the ground. The Skywalker is a self contained machine, which means that there is no need of external power at all. And as you can see, there is a compensated control lift done with condorates. So Skywalk in itself has 4 winches.
And everything is done by fiber ropes, which is Handled in a 4 render system enabled the Skywalkers to climb the windmill as it goes. It also contained the yellow adapter frames, as you have seen, which will be exchange due to the different diameter and size of towers. So now you can see the yellow adapter frames mounted on and then suitable for different oversize and also suitable for different producers of windmill towers. Of all the towers, it's done by standard adapter frames. And when it comes To installing of the nacelles and blades, there is special adapters tailor made for each Maker or of Blade or nacellve.
This might look as a small tool. However, if you can try to imagine that the diameter of these Towers are approximately 6 meter. And the height of these towers in the example here is about 160 meter. Now you can see we have an adapter for the nacelle, which is different, but however, fitting on the same frame as the others. So that is the whole concept between SKYYBOPPE.
That is a modular design, which is able to install different sizes of windmills and also different makes of Windmills. The size of this machine is about 20 meter long and 8.5 meter wide. So this is showing the lift of blades, which are in one of the most Kritigern Operations during installation due to the effect of the wind. And the operation should be completed. I think we can stop the video.
And if we are back to the presentation, I think we can jump to the next slide. Just need to shift here. We have been making different models to try to prove how SKYY Vodka will impact the environment and also the efficiency of Windmills Installation. And of course, there is a variation of sizes of windmills parks and it's also Sizes of windmills and the nature around different parks are also very different. But as you can see from the Slides, there is a huge benefit of using a tool like SKYY BOKU compared to a normal crane.
There is considerably reduction in footprint and site and CO2 emissions. And even more important, we are able to reduce the Time spent on installation by up to 80%. The basis to get Full benefit of the SKOVRKO will require a solid logistic planning by the installation and logistic companies for the windmills. Next slide. We are now doing the final design of our own KLM model, which will be tested in a wind tunnel later this year.
This test will verify our calculation related to control system, but also Operation Windu with different wind scenarios. We are also working with a CRM issue machine with a Heluggen generator instead of a traditional generator. And in addition to that, we look at a service version to enable smoother service operations. Related to offshore products, We want to test out our land based SkyWalker first. And then, of course, we look at the offshore market coming as very interesting and also a place for Skywalker.
Next slide. Then we're jumping to Syncholift, our shipyard solution. In late March, we moved into this fantastic building, also where I'm sitting today, located in West B. Now we have a new state of the art office facility, which give us room for expansion, but also it is a very modern, environmental efficient building. Next slide.
In January, we delivered docking solutions specially designed for aquaculture support vessels for the north of Norway. This is an interesting project for us because as a result of new regulation, these vessels need to be clean and when they relocate from one farm to another To avoid transferring viruses, bacterias and algaes from 1 agrochemgocyte to another. And this has to be done in a fast and smooth way. Water and rebreats has to be collected and our fast docking arms Make sure various vessels can be docked very quickly and safe. Next slide.
We have also done a quite new design of trolleys last year and they are now I'm the testing here in Norway for dispatch to the customer later this year. This is the first time in many areas we do such type of work in Norway, which again will give us a marginal extra cost. However, due to the risk, Especially now in the COVID situation, we decided to take this home and do it assembly here in Norway. And this will enable us To deliver in time, without this decision, we had struggled a lot to get this order out on time this summer. Next slide, please.
We started a service project last year to generate growth and also boost customer interaction. We will move away from more focus on out of service and spare parts and focus more to be a lifetime lifecycle partner for our customers. Already now, we see positive results and have secured a long term service contract Q1 And have been working with more leads now for more long term sustainable reoccurring business of service. This project is not done in a year, but our aggressive sales and good network will enable us to take bigger portion of our own store base in the years to come. Next.
As a parcel of our project, we also mapped our installed base and Following our leads globally, we have more than 150 shiplifts over than 15 years, which require attention. We have characterized various upgrades and then look at these as the most lowest hanging fruit, noted generate growth in the GPM Solution business. During Q1 and Q2 this year, we are doing comprehensive midlife upgrade in Southeast Asia, supervisioned by people from both our local Singapore office, engineers from Sigroof, Norway and engineers from IntelliLift in Kristiansand. By this, I will give you the next slide to be presented by Christoph, our CFO. Next time.
Yes. And just a key look at some financial highlights From the Q1. And as Praveen said, we did experience high activity in the Q1 with the revenues Of NOK 93,000,000 compared to NOK 66,000,000 in the Q1 of 2020. And again, the main driver behind the revenue growth is our newbuilding projects within Shipyard Solutions, where we have experienced good progress in our currently around 50 newbuilding projects. Looking at the operational EBITDA, came in at around SEK 17,000,000, and these are figures which Excludes gains and losses on foreign exchange hedging contracts With an operational EBITDA margin of 18%.
And as you can see from these figures that represent a Significant improvement from 2020, where the margin was 7.2% and operational EBITDA of 5,000,000. And that was also at the time where the corona pandemic was getting started with And we saw increased volatility across the market, so that should also be taken into consideration. Looking at the reported EBITDA, you may note that the 2020 figures were Quite negative with the SEK 24,000,000 loss. The main reason for that is that our hedging contracts Had a loss of NOK 29,000,000 in the Q1 of 2020 As the U. S.
Dollar and euro appreciated significantly against the Norwegian kroner. The reported EBITDA in the Q1 of 2021 is around SEK 70,000,000. So if you're going to kind of compare the Underlying business, the operational EBITDA figures is where you need to look. The order backlog, as Praveen has presented already, is still sitting strong at around NOK 1,000,000,000, which gives us a solid operational foundation for future periods. Our R and D investments is still an important area for the company.
And As Praveen has already been through the Starfish and Skywalker, we did have capitalized Expenses in the region of NOK 6,000,000 in the Q1 of this year compared to NOK 2,000,000 in 2020. And this R and D, capitalized R and D is mainly related to Starfish and Skywalker. So that was a quick overview of some financial highlights in the quarter. Next page, please.
Yeah, thank you, Christopher. So let's wrap up and summarize where we are today. We have an unique competence that have automated and digitalized the industry across industry sectors before. As we have explained today, we cooperate strongly with industrial partners to fast track the adoption of the unique competence in the new energy sectors. And we have a flexible business development and financial toolbox available to support us when needed.
Next slide. So to summarize, we have delivered a strong quarter. Our balance sheet remains strong and so do our backlog. As we have explained, our development projects are progressing according to plans. The outlook, as you see on the right hand side here, is identically to the one which showed you after the H2 2020 report.
The yellow ticks are partly done or fully completed issues. Within Syncholift, we have We landed attractive service agreement in the quarter, but this is just a start. We remain focusing on service and service the reoccurring business going forward. We are bidding for attractive ship lift contracts for the time being, and we believe we will have a strong position in this contract. However, we don't expect for the intake as we had last year, which was exceptional.
Our digital business have still solid leads on oil and gas software as a service project. We believe this We'll be materialized, but exactly when is still uncertain. So by then, I thank you for attending the presentation today. And We are open for questions from viewers. Thank you.
Thank you, Pramen. We have received quite a few questions. So we can start with the first Juan, given that 150 SynchroLift systems are older than 15 years, are you expecting Consider a replacementupgrade cycle in next year. And is there a reason why a customer would choose not to sign a service agreement with you When ordering a replacement or upgrade? You are on mute, Pemit.
In case, Prenit is having some technical difficulties. So if you can bear with us for 2 minutes, please. It looks like you lost microphone access or something like that.
Hello? Hi,
Prenit. There we are. Thank you, Prenit.
I heard your question. So yes, all ship lift above 15 years, they need service and they need attendance. However, what we have seen in the past is that not many customers are having service agreements. They are doing more All traditional service work, all the work and they do have been doing quite a lot themselves. However, now we have Reinforced our service department and also with the service branches, we're trying to tie up with more customers and convince them that To sign a service agreement will be a good and safe idea going forward.
Thank you. And there's a question for Christoffer. Is any of the grant from Innovation Norway included In the EBITDA numbers in Q1?
No. The grant, you can find Further information on this in the annual report where we describe this in more detail, but the way we recognize the grounds from Innovation Norway with regards to our R and D project is they come in as a reduction of capitalized expense. So it's merely a reduction of cost and not something that we recognize as revenue.
Thank you. Question for you, Pren. When do you expect the new initiatives, Skywalker and Starfish, to be ready for sale?
I mean, if you take StarFish first, where we are getting closer to something, We are already preparing our sales platform and hope to do this. So I for StarFish, I think we will be open for sale in a way as late this year. Sky Bokkel is too early. We will need next year for testing. But of course, we are working closely with the industry, both on Skywalkar and Staff is, so it's not that we are pushing the button and one day we're ready.
This is a continuous dialogue with potential customers For SKYY Walker, even if there is maybe a year or more until we can do some commercial sales, we have Weekly meetings with potential customers of our technology. And the same scope for StarFish. As said earlier, we have had Some aquaculture companies looking at the prototype starfish already, so there is huge interest and sales We'll follow. This is a continuous dialogue. It's not that we put a date that today we start to sell.
Thank you, Praveen. Christoph, there are a couple of questions asking For revenue split between shiplift solutions and other business area, EBITDA split and so on, but I guess you have A fairly generic answer to that question.
Yeah. I mean, as Pramod said initially, we will release In our first half report, further details with regards to the breakdown on segment level. However, as I said in the presentation, the majority of the revenue is generated from Shipyard Solutions and our newbuilding business. And all the areas are
There is one question again regarding Margins for service contracts versus margins for newbuild contracts. And I think that's specifically for SynchroLift. I guess we don't want to be specific on the margins, but maybe we can provide a general comment On the type of margins work. Yeah.
Traditionally, for business, This peak between newbuild and service margin are that traditionally service margins are higher than newbuild. In Syncholift, we are delivering Really good margin on newbuilds. And for the service, we are basically building up, which means that we have added Quite some costs last year with support personnel both in Norway and abroad to build the service business And expect, of course, when we are able to grow the revenue that we also service here, we'll end up in quite healthy margins. But We need to spend some money on service before we can collect. And we are growing, and we will be growing over the years.
Thank you. So another question on Syncolift. How do you view the shipyard market in terms of market Sharing growth. Do you believe Syncolif will, over time, take over more contracts from dry docking competitors and thus increase revenue and growth Through new installations?
This is a bit hard to say. As we have explained earlier, the sheet Yard market for Synchrony product is a very it's a fluctuation market. But if you look at a broader perspective, maybe the last 20 years, it has been stable. It's not growing, but it's a stable market. And it Have impacted by navy activity, but also on the commercial side, especially what we see now on the Supern Miega Yacht Market, which is actually growing despite bad times, also require typically Cheap lift instead of a more traditional floating or dry dock solution.
So It's hard to say, but at least what we have seen now that over the last 20 years, it's a stable market. It's It's not declining, but it's not growing either. So our aim now is to grow Zincolift by growing the service and up to sales market.
Thank you. Another question on the service side. For the 100 other OEM shiftless systems, how likely Is Nekka to be able to get the service contracts? Is signing of service contract typically contingent on whether you did the installment in the first place Or not?
Yes. Both yes or no. It is likely that we can get a part And the main reason for that is that most of the older old OEM, chiplets around the world, This company is non existing today. Most of them has either closed on the business or gone bankrupt. So therefore, there is a vacuum for services for auto OEMs, and we have a potential there.
We have done one installation now in the Q1 with the service upgrade we've got last year, which is for a third party. So it's definitely a market we're looking into.
Thank you. Christophe, one for you. Is Q1 typically a weak Quarter for Netcock.
Yeah. I mean, the underlying business is not a seasonal business itself. However, looking at the historical figures, the story shows that Normally, the Q1 and Q2 are a bit slower than the 3rd and the 4th quarter. So If that will be the case this year, I'm a bit early to say, but that's how the historical trend has been as we have And I finalized more project towards the end of the year.
Thank you. Another question from you Christoph. We actually received A couple of questions regarding R and D costs in general and CapEx needs for Skywalker and Starfish. So I guess instead of listing them all, maybe you can provide a sort of more generic comment on R and D and CapEx requirements for the development projects.
Yeah. I can just, on the general well, first off, we have received quite a bit of funding for Both those projects with 10,000,000 on, on, Starfish and 21,000,000 in, for Skywalker. So that funding will take us a bit far. But, of course, We need to put in additional R and D investments, which we have also Outlined in more details in our annual report. So we have increased our R and D budget for 2021.
However, going into kind of the details on that, I think we will that will come in later reports.
Thank you. Question for you, Pernod. How scalable is the production of SyncroLift?
It's a very scalable setup we have here. All sales and design engineering and sourcing is done from our office there in Westby. However, we are subcontracting all production of Hartejk. We are also subcontracting all control system things, but that's through ourselves, through Intellif. So we are very flexible here.
And we have seen with the backlog we have now and the execution going on for the time being, yes, we are busy, But we are open to take more. So we have a standardized product. We have production in many different countries. So we can take more. We have had a peak on engineering in Q1, But already now, we see that we are able now to pick up on new projects.
Thank you. Another slightly different topic About the use of IntelliLift competence across the group, the question is using IntelliLift or The digital solutions business area competence through new applications such as Skywalker and Aquarius, What kind of tweaks and changes in the application is required?
Basically, we have a software is complicated. But we have been now working with Synchro with IntelliLift for more than 3 years. And they have developed their own platform through various development projects also in the past supported by Innovation Norway to build a platform for integration of machine data and sensor data And we're utilizing this in our reef time system. So basically, it's not a big difference, especially not when you compare what we have done now in the past for renewables and oil and gas into SKYY Walker, the technology is very much When you come into StarFish, it's slightly different. But again, it's very much about the same.
It's just collecting sensor Machine data, integrate them, sort them and visualize them. So basically, we are using the same platform. But of course, there is adjustment and development to be done, especially now with Aquarius where we're talking about to take in and integrate biomass measurement, lies counting, maybe feeding, maybe So there is lots of work to be done, but the framework for the system is already something we have.
Thank you. Another question on Syncolift. Which geographical regions Our market has been driving most of the growth in the shipyard solutions business. And how is the current sales and commercial activities in shipyard Specifically, looking at whether new markets are interested or not.
I mean, again, these markets are moving. And I think we have shown before the map of where we have installations, and we have installations all over the world. And what we see now, maybe this year, is that there is activity in U. S. There is high activity in Australia, which have been sort of quiet for some years, but these are moving around.
But there is several projects now in Australia, which is interesting. And there is also project both in Europe and USA. So it is a global business and there is global project. But what we believe we see for the time being is that There is a sort of delay in planning a decision making now due to COVID. This is huge investment.
And then, of course, The Syncliff is a small part of it. It's normally a development project in a new land area. So this takes time, and It is a global business. And of course, the COVID situation with no traveling and so this project looks to be moving slower than normal.
Thank you. A question on Skywalker. I know that we have covered this in the presentation. But just in case We haven't been very clear on the topic. I will raise the question, Pren.
So will you do a partnership similar to Starfish For Skywalker.
In a way, we have the same type of partnership for Skywalk, as we have for the stoppage. We are working closely with Fred Orson on this project, and they are, let's say, covering the side of technology, we don't have. And we're also working closely with 1 OEM turbine maker. So The nature of these two development projects are very similar.
Thank you. And another question on the sale process for Skywalker. Are you Expectable to sell SkyWalker Solutions to OEMs of wind turbines, the utility companies, The wind consultants doing the installments, such as a Qualys Brahma or all of them? So basically, who will be your customers?
Yeah, we are working with different business models for this. And this is Skywalk is not only disruptive
technology of
lifting, it's also a disruptive Technology of lifting, it's also a disruptive logistic exercise. So that's why the whole end customer will look like For the time being, it's not 100% clear. But yes, there might be turbine makers. It might be Wind Park Installation Companies or most probably, it might be both.
Thank you. And there's a question on the pricing of service contracts. And I guess this is specifically for shiplift solutions. How does the pricing of service contracts work? Do you add a markup on new parts being replaced As well as an hourly rate or are these long term contracts where the customer is charged an annual fee regardless of usage or not?
The nature of this contract can also be different, but what we have seen lately and the contracts we have signed lately is a fixed annual fee, Normally including a number of inspection days and work days and a list of spares. And then All out of the box spare parts needed will be charged additionally. So it's a yearly fee.
Thank you. I think we have covered the majority of the topics on the question that we Ham, there is 1 or 2 final questions. 1 on SynchroLift. Are you Expecting increased fiscal spending to be beneficial for Syncholift in the coming years?
No,
not
in a different level than what we have today.
Thank you. I think we will have fine conclude today's session with a Question again on the competitive landscape for SynchroLift. How do you see the competitive landscape for SynchroLift developing? Are you gaining market share From your competitors?
As explained earlier, we have a very high market share. I think over the 20 years, The last 20 years, we have about 60% market share. And if you take the last 5 years, I think we are up to 70% market share. But the competitive landscape is in a way, yes, it's changing because some players Our discontinuing shipyard business and some new players are coming up. So yes, for the moment, we can see a sort of shift in a competitive landscape.
Thank you. Just one more question on Skywalker, Pramod. Can you elaborate on the opportunity of onshore and offshore wind for Skywalker? How large are respective markets?
For the onshore market, of course, we know the market is enormous. If you see the plan In Europe, at least over the next 10 years, it's lots of wind parks to be installed. For offshore, it will also be a huge market, I think especially Here in North Sea, there will be many new wind parks and we see now the tendency that The government want to move the wind parks from land to offshore. It's Slightly more complicated to do it offshore, and the windmills are bigger and more heavy. So that's why we have Now at the beginning with the onshore version, also because there is a big need to achieve The market growth, they want to achieve and then to move offshore later.
And also, we look at offshore market as Maybe a 5 year delay than the land based because the parts we are talking about now up here is probably to be developed from late 2020s 2030s.
Thank you, Pramod. I think we have covered the large majority of I'll start to comment through the Q and A. So with that, I think we can say that we will conclude today's session. And we will Okay, Stoffe, you will confirm that we will provide another update in August, that's right, which will include full scale First half year financial report, correct?
Yes, that's correct. That will also include the segment reporting as a part of that.
Thank you very much. Thank you for listening, everyone.
Thank you. Thank you.