Ladies and gentlemen, good morning, and welcome to this fourth quarter presentation for Otovo ASA. Today, I'll give you a business update that shows somewhat weaker sales and installations than the year before. We have not been sitting idle, looking at this situation develop, and have used the quarter to do a business reset by cutting costs and cutting operational expenses and setting ourselves up with a core of European shared operations in Madrid, with a lower cost base that will take effect in the second quarter and allow us to have much better operational leverage as the European market for residential solar and batteries rebounds in 2024. We'll also look at the portfolio development, in which we've transacted on our first portfolio sale in the fourth quarter.
We'll give you details on the first tranche close and also how the future business develops with the Swiss Life deal for Norwegian and Swedish kroner. We'll also be looking at the value creation that we can expect from the euro portfolio that we're planning to transact also this year. Then we'll have a look at the financial results before doing a summary and outlook for sales in the year ahead. Then we'll open up for Q&A, so please prepare your questions, and we'll answer them as best we can about a half an hour from now. Okay, so let's dive into the business update. This is a quarter in which we've done 12% fewer installations than the same period last year. That is a direct function of sales in the third quarter.
We're down to about three months waiting time, so we have the next quarter pretty much pre-programmed as we close the quarter. And with the sales, we're down 10%. We're closing the gap to last year, but we are still behind, coming in at 1,641 sales for the quarter. That being said, revenues are holding up well. We have a roughly flat development on the revenue generated, thanks to a strong showing in the subscription segment, where we're having higher subscription share and a higher uplift in value from those subscription sales. As for the gross profit generated, it's a record quarter.
The blended gross profit was 26% lifted by both an improvement in the gross profit from direct sales and from the subscription segment. And that's an improvement of 6 percentage points from the same period last year. When looking at the EBITDA generated, it is a -26% when accounting for non-recurring costs. Without that correction, the EBITDA generated is -38%. One of the things we're most proud about in this quarter is the value creation from each customer. That is felt in pretty much all quality metrics and first and foremost in the battery attachment rate.
This quarter, we've taken a step up from about 25%-35%, lifted by both intra- country growth that represents about two-thirds of this uptick and one-third in the country mix, whereby we're selling more systems in battery-heavy countries. But this number is buoyed by the fact that batteries are becoming better, cheaper, and more consumer-friendly and really is a step change for batteries in Europe that we're happy to be a part of. In terms of the ticket size, that is the amount that we charge per customer before the subscription uptick. You can see that coming in at NOK 125,000.
In fact, expanding from 120,000 a year ago, despite a cost reduction in panels and labor of about 35%, that we've been working hard to realize across Europe in order to create value for customers. But you can see that we're able to sell more panels, more batteries, more valuable stuff to our consumers, even in a market in which the price for solar is coming down. So that's a point of pride for us and something that we think we can keep up into 2024. In terms of the subscription share, it's one-third of the systems installed in this quarter, and the sales intra- quarter indicate that that number will keep coming up into early 2024.
As I said, gross margin term-generated coming in at an all-time high, by the fact that we're selling more valuable stuff to each customer and that we are essentially done with the investment phase in new markets, that has been watering down this number for the last 4-6 quarters. Now, let's look at the company development. Otovo is a platform that helps homeowners go get solar, EV chargers, batteries, and heat pumps. We're on a mission to bring European homeowners easy and affordable clean energy. What we've been hard at work doing this last year and a half is essentially to build a unique European platform whereby we can make a monthly subscription out of all clean energy technologies that homeowners need to save money on their electricity bill.
In order to that, to do that, we've built a pan-European subscription platform with a legal, business and financial setup, allowing us to do that. That subscription machine rests on top of a low-cost, scalable operation that is centered in Madrid, allowing us to move our marketing and operations resources to the markets that are hot without burning cash in markets that are not. To zoom in on each one of these, let's look at the actions we've undertaken in the last year or so. First, on the subscription platform, 2023 started with us establishing a financing facility with two Norwegian banks and our equity owners, allowing us to have a pan-European balance sheet to build subscription assets.
Then we've expanded to become a multi-hardware platform that can sell solar batteries, but also heat pumps and EV chargers since the end of 2023. We've conducted our first portfolio sale by transacting the Norwegian and Swedish assets with Swiss Life Asset Managers, turning these monthly payments into a direct payment for us, creating value creation in the moment and in the future, cycling cash back faster to us. A big improvement and a big proof point for the subscription business. Then, in terms of the low-cost, scalable operation, over the last year and a half, we've gone from being present in 7 markets to 13, with a software-based approach that is proprietary to us both in marketing, sales, and operations.
We've established a shared service center in Madrid since April 2023, that is now a cost-effective backbone for operations, marketing, and finance for all of our countries. And then we have leaned out our cost structure, allowing us to do even better on operational leverage by doing significant cuts in the number of people employed and the SG&A costs across Europe in December 2023. And let's zoom in on that. So in the last quarter, we have done headcount reductions in headquarters functions and in high-cost markets. We've continued the transfer of tasks to Madrid, and that has resulted in moved functions from Norway and Sweden to Madrid.
Downsizing of headquarters functions and middle management, mostly in Oslo, and downsizing and regionalization of our sales force and management in the Benelux, France region and in the Alpine region. On top of that, we've reduced our running cost by downsizing and closing offices, by purging our software cost base and renegotiating our software contracts, by reducing travel and in-person presence, and cutting and insourcing external consultancy services. The effect of that is that 65 people will be leaving the company, a reduction of head count of 15%. That, together with the SG&A cuts, will lead to a reduction in operational expenses of between NOK 80 million and NOK 100 million, taking effect as of now, but reaching full effect by the end of Q2.
When comparing these numbers to Q3 volumes and marketing, it is expected that that brings our cost base down by NOK 80 million-100 million. We'll have a company in which 24% of our staff, one in four, will be located in Madrid, doing shared services for the group, and those functions handle 75% of projects that are going through the platform and 100% of the marketing. And this is a unique platform that allows us to shift our attention to the places in Europe where the solar market is strongest. It is also a way for us to have pooled efficient resources that are heavily supported by software. And as markets grow back in 2024, we will see the full effect of this move.
Currently, we're at the non-headquarter payroll of NOK 26,000 per project, when running at the capacity of about 2,000 installations. But that's way below our max capacity. If we increase our installation to 3,500 or 4,500, we'll see a further drop, leading to as much as a 60% drop in the personnel cost per project, going forward. Now let's move to the portfolio monetization and development with my colleague, Petter Ulset.
Thank you, Andreas. In November, we closed our hallmark transaction, where we sold the first batch of subscription assets to Swiss Life Asset Managers. This covered the subscription assets in Norway and Sweden. We sold it to a reputable buyer, who had done very thorough due diligence on both Otovo and our subscription setup. We believe this validates the business model, and we also proved the unit economics. In the deal, we also recycled cash back into Otovo, and we improved the future cash flow profile for the business. The transaction was announced in October 2023, and it consists of two elements. It's a first close that covered vintages built between 2020 and November 2023, and a continuous sale agreement, where Otovo continues to sell assets to Swiss Life until the end of 2024, with a possible extension into 2025.
The transaction was closed in November 2023, and the partnership is operationalized. At the first close, Swiss Life acquired the shares in Otovo's SPVs in Norway and Sweden for a total consideration of NOK 257 million. Out of the NOK 257 million, NOK 7 million is related to working capital. When looking at the accounting gain from the transaction, we had a gross accounting gain of NOK 53 million. From that, you have to deduct the excess values, which is attributable to the acquisition of Edea back in 2021 for NOK 9 million, and also transaction costs of NOK 6.5 million. That leaves a net accounting gain of NOK 38 million, and the net assets sold as part of their first close has a value of NOK 196 million.
If you then, look at the enterprise value of NOK 250 million net of working capital and hold that up towards the net assets sold, that gives an uplift of 1.3. In addition, Swiss Life will pay Otovo a management fee over the lifetime of the contracts, which has a total NPV of NOK 12 million when using the discount rate from the Swiss Life transaction of 6.4%. Looking at the continuous sale agreement, which was operationalized in the fourth quarter, Otovo sold assets to Swiss Life after the close of their first transaction, for a total of NOK 5.6 million. Those assets had, a cost of goods sold of NOK 4 million, meaning that we, in the, continuous sale agreement, earned an uplift of 1.4 on the net assets, which are sold.
In the same way as for the first close, we will also earn a management fee, which is a total of NOK 0.3 million over the lifetime of the contracts. In the first close, we sold assets which we have built over the last 3 years. From that, we learned a value uplift of 1.3. In the continuous sale agreement, which is operationalized, we have better assets, which earns a value uplift of 1.4. In the continental portfolio that we're building in countries with more sun and higher electricity prices, which yields a better customer business case, we have a bigger portfolio of higher IRR assets, which we believe will earn a higher uplift than in the continuous sale agreement. Then over to the financial results.
In 2023, the company had more than NOK 1 billion of total operating income, even disregarding the portfolio sale to Swiss Life, which is a milestone for the company. In the fourth quarter, we also continued to improve our gross margin, which is up 3 percentage point year-over-year to a total of 20%. We also had OpEx of NOK 180 million, but that is inclusive of non-recurring costs of NOK 34 million, which I will get back to. In the quarter, we had an EBITDA of negative NOK 93 million, which is negative 40%, and for the year, we had an EBITDA margin of negative 30%. That is an improvement of 9 percentage point from 2022. Then zooming in on OpEx. We had total OpEx in the fourth quarter of NOK 180 million.
That is inclusive of one-off costs of NOK 34 million. If you disregard that and look at local and group OpEx, it's largely stable from Q3, and we also expect that to decrease in Q1 and Q2 as we factor in the cost reductions that Andreas went through. Going through the one-off costs, we had roughly NOK 10 million of restructuring costs. That is related to layoffs that we did in Q4. Then we had NOK 16 million of costs related to the equity program. This is non-cash costs, which we have to take in accordance with IFRS, where we have to take all remaining costs when we cancel options. We also had NOK 9 million of advisory fees related to the subscription portfolio. This comprises advice relating to the FSA process and other activities not attributable to the portfolio sale.
Going over to the balance sheet, we see that it will strengthen in Q4, both as a result of the portfolio sale, but also of the equity raise we did. Also worth mentioning is that we had a reduction in other current assets of NOK 394 million. This is inclusive of the sale of the majority of the remaining Italian tax credits. And we also ended the quarter then at a cash position of NOK 583 million. If we bridge the cash position from the start of the quarter, we started the quarter with NOK 238 million. Net proceeds from the equity raise was NOK 439 million. We also had NOK 85 million from the subscription portfolio sale. That is inclusive of NOK 170 million in debt repayments to DNB and SR Bank.
We also had NOK 90 million of operational cash flow. We had NOK 69 million in investments in the SPV, which is inclusive of repayment of debt and also interest, and then a negative of NOK 20 million from other items, most notably NOK 10 million for capitalized R&D and currency effects. Total, we ended the quarter at the cash position of NOK 583 million. With that, I turn it over to Andreas for summary and outlook.
Thank you, Petter, and now let's dive into what the future holds in 2024. This is a year in which all the triggers to spur growth are in place. We're seeing the best consumer business case for solar and batteries ever. The components of that business case are, one, the energy price, and we're seeing that increase across Europe, both in countries that are seeing grid investments passed on to consumers, countries that are rolling back emergency measures for consumers on the electricity price from 2022, and countries with politically set prices, such as France, that have been hiking prices three times since January last year, and last time as late as February 1st. Put that together, and electricity prices are back on the rise for consumers in Europe.
And more important, the solar industry has been doing its job in reestablishing the attractiveness of this market for consumers. Costs are down 35%, both counting hardware cost and labor cost, and that is both the module, the installer, and the battery all coming down in cost. Cost of solar has been at all-time lows since October, November, and that downward path is continuing into 2024. And on top of that, politicians are getting out of the way by doing regulatory simplification in several countries, notably Germany and Norway, and we're seeing the possibility of new support schemes, some taking effect as the Austrian one, where there is zero value-added tax as of January, and other promising schemes seem to be in the works in some European countries. Put all that together, and the consumer's business case has never been better.
Now, the question is, which consumers will buy with these good conditions? Our view of the market is that it's going to be strong in the south, moderate in the north, and a bit of a question mark on our performance and the performance of the markets in the middle. Now, let's zoom in. In the north, we have consumers that are pressured by high mortgage rates and particularly in the Nordics. On top of that, we're seeing levels of saturation being met in Belgium and the Netherlands, and we think the room for growth in these markets is a bit subdued in 2024. The south, by contrast, is looking more rosy. Italy is now politically more stable compared to last year, meeting easier comparables as of mid-February in the non-subsidy market.
Switzerland and Austria also looking strong in the beginning of the year, and France, as I said, buoyed by higher electricity prices and a strong decrease in the cost, finally looking like one of the big growth makers for the year ahead. Spain had a weak 2023, seems to be back on the growth track, has really nowhere else to go than up, and Portugal has been a strong market for us, and we believe will keep up the pace in 2024. Put that together, the south looks good, and then the question mark is for the middle. Our market share in the U.K., Poland, and Germany is relatively low.
That means we have room to grow, a bit independently of market growth, and these markets are also places where we can see some policy triggers that adds growth to that. We believe that 2024 is going to end on an upbeat note, and we're starting to see encouraging signs starting in the south. So where does this leave us at the end of the fourth quarter? I'd like to put forward that our revenues held strong due to resilient ticket size. We're reducing cost to the consumer, but we're able to add more product to defend the ticket size; that's a real good thing for us in the fourth quarter. We've reacted to market conditions.
We've used our momentum in creating a strong organization, and we're reducing cost by a cost program that was executed in Q4, and that is expected to bring savings of NOK 80 million-NOK 100 million on an annual basis within six months. We've also done good portfolio development, selling our first Norwegian and Swedish-denominated portfolio, turning that into a continuous sale agreement, and now moving on to the Euro portfolio, seeking to do a similar deal shortly. We've strengthened value creation, expanding margins to all-time highs, driven by stronger battery rates and a higher subscription share of our business. For the sales outlook, as I said, it's looking better in the south, and we hope that's the start of a positive 2024.
And with that, I'd like to invite Petter back on stage and open up for the question and answer section.
All right, let's see which questions have popped in here. So first, does the guided OpEx decline of NOK 80 million-NOK 100 million include impact from inflation and the launch of new products, including EV chargers and heat pumps? The answer there is yes, it includes inflation, it does include the EV charger. So meaning that we will absorb inflation and still be down NOK 80 million-NOK 100 million, and we will absorb the added activity with EV charger and heat pump offerings in more countries, and still be able to be down NOK 80 million-NOK 100 million. Next question.
Can you give more color on the cost cuts? Are we going to see a substantial drop in OpEx in Q1 or Q2? So with regards to the personnel, the people are mostly off payroll already. The OpEx, declines that are not related to personnel, have been decided and, negotiated and implemented, and will start feeding in already in Q1, with full effect as of the end of Q2. The next one here is: If you can run these markets from Madrid, why did you build local teams in the first place? What changed between 2022 and 2023 to make this possible? So in 2022, we expanded to six new markets, establishing a vanguard team in each one of these markets, enabled to...
In order to be able to market, sell, and operate the platform in these six new markets. As this presence has been established, that part of the work is done, and now we've kept developing the technology, we've kept developing the operation, and we see that we can run the Otovo machine more efficiently. And Otovo doesn't have to be physically on every person's doorstep in order to execute our sales and operations. And so we can run this to a large degree remotely without having every person on the ground locally. So I think we will just keep developing the efficiency, and that makes sense to us.
Fourth question here is, your battery attachment rate jumped 10 percentage points. Is this going to go back next quarter? And why has this not led to an increased ticket size? So the attachment rate jumped 10% due to a mix of growth in each country. That's driven by the fact that batteries are getting better, they're getting cheaper, more consumer-friendly, and as such, they are more often in the money, more useful to consumers. I think that trend is strong, and that's something you can lean into in the year and years ahead. So there can be variations from quarter to quarter. There can be changes to the mix between countries, but overall, the direction of travel is for battery attachments to go up in this industry, I believe.
Anything we should add there, Petter?
I think we should also add that we have seen that countries that have a high share of batteries are also overweight, more overweight this quarter compared to previous quarters.
And then there was a part of the question that was, why has this not led to an increase in ticket size? And, I think the premise there is there has been an increase in ticket size. We come in with a ticket size of NOK 125,000 in Q4, compared to NOK 120,000 in Q4 of last year. That's without including the uplift from the leasing value creation or the subscription value creation. And keep in mind that that's happening at the time where the cost of panels and installation of solar has come down a lot. So we're pushing hard for the consumer business case to improve.
That has happened, and we're able to still take more money per shopping cart out than we did a year ago. So I think it's a testament to how important it is to keep adding a product. Batteries are essential there, and so will EV chargers and heat pumps be as they get available in more of our countries. Next question is: Are there bullets left in the chamber if sales come down further? What OpEx should we expect at various levels? So, with regards to these cost cuts, this is not our first rodeo in terms of changing organizational size and configuration. I think we are...
We've done the moves that we think are necessary, that give us the right trade-off between having a likelihood of regaining sales, having an organization that can create a value uplift through selling more to each customer leaning more into the subscription product, getting sales volumes up while taking down cost and being as efficient as you, as you can. So we think this is the optimal configuration going into 2024. We also have a machine now that is that can carry more than the installations we did, just below 2,000 in Q4. And as sales and subsequently installations grow in 2024, we will be able to grow those installation numbers without adding staff.
And even going beyond what our capacity is, we can increase staff less than volumes. So the OpEx per project should be coming quickly down in 2024 as volumes pick up, and we burn less in the base case. So I think we're well positioned there.... Next question is: if you did the Euro deal today, roughly how would the numbers on that look compared to the Swiss Life deal? I think maybe that's for you, Petter, if you want.
Yes, and I think it's still a bit early days, but we of course observe that there is a trend downwards in longer term interest rates, so that should favorably impact the deal. As well as the Euro portfolio is bigger, it has better assets, as it's more southern in Southern Europe with higher electricity prices, giving a better consumer business case and higher IRRs for Otovo.
Good. You have been talking about the sales rebound for a while now. What makes you think things will change? I think the facts on the ground are more advantageous now than they have been for the last four or five quarters. We are seeing electricity price hikes either implemented by politicians, fed through the grid prices or through rollback of emergency measures from the energy crisis. That's meaning that the savings go up for consumers. The cost side of solar has done a tremendous job, and it's... This you see from a lot of cyclical markets, that costs come down and that reestablishes growth in the market. That is a fact, and the cost of solar has come a lot down.
The cost of batteries is coming down abruptly now at the end of the year, so that's great. And then on top of that, I think we've spent the last part of 2023 in establishing our operations, marketing and finance teams in Madrid. This is now a flexible organization that can optimize our spend and effort into the markets that see growth. And I think that is really an important lever for us as we can work to be more exposed in markets that are easier to grow in for us. So that gives us ground to be optimistic, and I think that optimism starts in the south and will work its way upwards. Do you expect to sell more units in 2024 compared to 2023?
And I have to say an unequivocal yes to that. I do expect and plan to sell more units in 2024 than we did in 2023. With the Nordic markets for residential solar looking weak, how do you assess the risk of a total portfolio sales to Swiss Life Asset Managers ending below the announced maximum deal size of NOK 700 million? Petter, how do you feel about that?
I think it's important to note that there are no penalties built into the deal, right? So there are no penalties should we not meet the volume commitments. Then, having said that, we know that in solar, things can turn around quickly. We have seen that before, and it's also seven quarters at least left of that deal.
Good. There seems to be no further questions. So, with that, thank you for tuning in. Thank you for your confidence in us, and we're looking forward to 2024.