Welcome to this second half and full year report for Vow. My name is Henrik Badin. I'm the CEO of Vow, and I'm also joined here today by my CFO, Erik Magelssen, for questions. Let me start off. Firstly, about us, for new investors. We are a provider of world-leading technology to eliminate pollution, enhance circular economy, and to mitigate climate change. We are offering patented, unique solutions that turn waste and biomass into CO2 neutral energy, decarbonized energy, low carbon fuels, and biocarbon. We have over years proven our ability to continually develop and deliver technology and equipment to complex industry scale solutions and applications, and we are doing that in close cooperations with our customers.
We have a strong backlog of orders and a large install base for leading players in a wide range of industries that provides recurring business for us. On the right side, you see our brands within the Vow Group. Scanship, who is our sort of company, our vehicle towards the marine industry, specifically the cruise industry. ETIA and the brands BioGreen and Ascodero are brands towards our land-based activities to date. Some key features. We are a group, we are a technology provider. We have today in the company a portfolio of patents. We have 117 patents within 17 patent families. We have 35 proprietary technologies in the group, and 25 technology applications that we can claim our IP on.
We have over the years delivered more than 450 systems, and we have 120 systems in our backlog to be delivered in the coming years. We are sort of continuously growing the business and today we count 181 employees. We're operating out of sort of six countries in the group, headquartered in Norway. We have operations in France, Poland, United States, Canada, and Italy. Moving on to financial and operational headlines for the second half and the full year. These are the key takeaways. We are delivering on the full year. We have revenues of NOK 454 million, and this is on par with what we did in 2020.
It shows a significant improvement in the second half of the year. EBITDA for the full year was NOK 43.5 million. Profit before tax was NOK 325 million, and that reflects the value created in the successful demerger of Vow Green Metals. This is of course a one-time effect in our P&L, and it demonstrates, you know, when we are doing these type of spinoffs, the value creation we're doing. Of course, we have said that before, Erik, that let's make this a recurring activity.
For the second half, we have revenues of NOK 253 million, and that's 25% increase compared to, you know, last reporting, our H1 2021. EBITDA margin remained at 9.2% level. I will go into the different business segments in the following slides, but, you know, concluding this slide with sort of a continuously, you know, very high order backlog, and it takes us an estimated record of NOK 2.1 billion when we leave the period. And that includes NOK 826 million of optional contracts in our, you know, cruise new build portfolio. It's a strong foundation in the business when we are moving forward.
Looking at the key financials, you see the half years all the way back from the second half in 2019, now in the second half of 2021. You see also the business areas divided, breaking up the revenue. You see the cruise project shares, you see the aftersales and land-based, and you see that the total of NOK 253 from the, you know, in the second half of 2021, and that's sort of the best second half we've had through this period.
We also have to be reminded that, since the first half of 2020, we have been in the pandemic, but still we have managed in this period to grow the business, and we have also done that with the fairly stable margin. Another important point is that in this period, we haven't had any contribution on the margins from the aftersales side, neither from land-based. So, you know, we are satisfied with the performance throughout that period. Of course, now we're gaining speed. On the right side, you see the order backlog build-up, and that's sort of a strong performance in the period.
We have. You know, even though in 2021, still the cruise industry have been in you know in the aftermath and still in the pandemic situation, we have had sort of a very high order intake, both in cruise and now also in the land-based. I will go back more back into that as we go forward. You know, what I also would like to highlight is how we are doing in the Q4 . If you see there on there, you know, we are actually increasing our revenue with 60% going from the third to the fourth quarter. You see how both we deliver a higher top revenue line on the cruise projects.
You see aftersales now is returning, and land-based that we recognize revenue for NOK 52 million in the Q4 . Really, you know, a significant shift, and we're gaining speed when we're now moving into 2022. Looking at the business areas, business segments, cruise newbuild, we continue to deliver a solid performance within the cruise project side. It's on par with what we did last year. For the full year, we have even a stronger EBITDA margin. We of course continue to look for opportunities to improve our operational efficiency.
If you look at, as I mentioned earlier, look at the order intake, you know, for the newbuild and retrofit contracts, you know, where we signed up contract worth NOK 246 million in the second half, and for the full year, NOK 370 million. That's sort of a very good performance even though, you know, we have to realize the fact that the cruise industry has been out of service for most in this period. This takes us to the share of the revenue within this business segment. It's 65% of the total. It's sort of the solid base of our business in this period.
Looking at aftersales, as we have said many times, you know, this is a business area that has been historically one-third of our revenue. Of course, as ships has been out of operations, this has been heavily impacted. Of course, you see now we are back in black. We have revenues for the second half, NOK 33.6 million. In a normal year, before pandemic, that would be more than NOK 60 million. That's sort of, I said, historically 30%. This is 11%. This is of course low. It's no contribution to the results.
Of course, this is returning now as, you know, the relatively, you know, most of the people are now vaccinated and, see, CDC in U.S. has no more restrictions on cruise operations, and we see ships are returning into operations. Land-based, this is a 51% increase year-on-year. Of course, driven also with the large contract awarded from Vow Green Metals, the NOK 250 million. This is a contract we're delivering equipment on. We will deliver equipment to the first site at Follum this year for the total value of NOK 250 million, process equipment will be supplied in the Q2 and the Q3 this year.
Of course, the dominating part of the contract will be converted into revenue this year. You see, we are also in the black numbers on the second half for the land-based side. Of course, what is also, we have in the period reported new contracts, new cooperations with blue-chip companies in the space, and you know, confirming their you know, climate roadmaps, and they see that you know, Vow technology is relevant for them. Yesterday, we also announced a press release on GRTgaz. I will give sort of more insight on that in a following slide.
Land-based, today 24%. In this period, 24% of our top revenue line. Okay, let's look forward on our strategy and our forward outlook. I would like to, you know, first talk about our drivers. I've been talking about the drivers many times, but of course, circular economy is definitely a driver for Vow, with Vow technology and industry push for decarbonization. Of course, we see the policies and regulations are backing this. We have EU Fit for 55. We have the EU Green Deal that supports this. We have the economic realities for the industries. We see the increased prices on CO2 emissions. Of course, we have the capital moving in this direction. Of...
It's very interesting to see Larry Fink, the CEO of the world's largest asset manager. Their investment portfolio is today, I think, eight times the Government Pension Fund of Norway. Of course, when he sends out the letter to all his CEOs, saying that, you know, "Decarbonize or die," it means, you know, the capital is really moving and pushing in this direction. Of course, we also read in the newspaper today that our Prime Minister met Larry Fink the other day, and he got some advice on how to move in this direction as well. Okay, the industry response. Then of course, going back to the fact that we have a lot of blue-chip companies in front of us.
Of course, coming from the cruise industry, we are a well-positioned market leader in that space, but now we're moving into new spaces, new markets. Of course, we have spent a lot of time talking about the metallurgic industry. That's a mature market when it comes to the need to replace coking coke, fossil coke, fossil virgin coke with biocarbon. But also, the metallurgic industry itself is a high-temperature industry that today are using natural gas in their processes. A way for them to decarbonize is to replace that natural gas with climate neutral gas.
Of course, we have that technology that combines that to produce biocarbon, and that is sort of the Vow Green Metals vehicle that we created and of course, ArcelorMittal that we're working with to develop a project in Luxembourg, in Rodange, to help them decarbonize their operations by producing climate neutral gas. Repsol is a company that we have been working with for a long time. They moved forward in their project by ordering a demonstration plant from us in around Christmas. This is a part of a larger project to scale up in their Bilbao refinery, a way to convert urban waste into climate neutral gas and advanced carbon products.
Of course this is, you know, it's by them ordering demonstration plant, we feel that, you know, this is moving really in the right direction. We have the other parts of the European industry, especially the consumer goods industry. We have been now working with a couple of companies. Philip Morris International spoke about that last time. We have with our technology helped, you know, enabled them to become sort of carbon neutral in their Neuchâtel facility in Switzerland, at their largest production facility. We're also working with Circular Carbon.
That's a similar, you know, build-own-operate vehicle as Vow Green Metals, but this is in the cocoa industry, where they are using the waste from the chocolate production, the cocoa shells, and to convert that into gas and use that in their high-temperature processes, and then valorize the biocarbon for industry. It's an interesting way and a great opportunity for us to deliver technologies to these type of ventures going forward. There is really a push for industry decarbonization, and there's a push to replace virgin fossil coal, and we see industries moving and of course we are on that train together.
Looking at the cruise industry before we move more into the MSC, and you see this you know solid platform we have here, and you see the market you know footprint we have. Of the 58 cruise ships under construction at European yards to hit the water from 2022 until 2027, and these are ships that has more than 600 passengers on board. There are more ships, but I'm you know focusing on what the core market for Scanship and Vow. You see that we have already you know waste management system. We have 36 out of the 58, and we have 39 of those with advanced wastewater. Now we are looking at market shares well above 60%.
That's sort of demonstrating our strong position in this space. In addition to this, of course, the cruise industry has older ships, and they are refurbishing ships, they are upgrading ships with new advanced technologies, and we are a part of that. We are now in latest periods working with 3 retrofit projects with Carnival Corporation, the biggest operator in the cruise industry space. Of course, retrofits is an interesting part of our business. We see that predictions of more, you know, a portfolio of potential 30 ships that will be retrofitted, and we are in a very good position to take a large part of that volume going forward.
Of course, that will also drive the top revenue line for the business going forward. Looking at the aftersale, of course, this has been where we have really seen the negative impact in the pandemic. In an interesting chart on the right side there, you see the revenue and the margin for us by quarter. You see the Q4 in 2019 and the Q1` in 2020 was pretty. This was pre-pandemic, and you see where we were per quarter. We were more than NOK 30 million per quarter.
Of course, as the cruise industry voluntarily did close down their operations in the Q2 of 2020, you see, of course, our sales of aftersales went down. The red dots are the number of ships back in operation, and you see how that is now coming back. For Scanship, it means that 86 ships are now back in operation in our portfolio of ships. We have more than 130 ships in operation with our technology. It means that, you know, this is really picking up, and we see clear evidence of that in the Q4 . But still, you know, we are way below what the normal situation would be.
On top of that, we have increased our install base with 14%. When we, in 2019, had a top revenue line, you know, a revenue within aftersales of NOK 126 million, we have now 14% more ships in operations with our technology. It means that when all ships are back in operations, there are, you know, 14% more ships, and that will further drive our top revenue within that space. Okay. Now looking more into the land-based side, and I've talked about sort of the economic realities for industry now, and, you know, decarbonize or die.
The fact is this is an economic risk for operations, more and more industries to move in the green direction, to reduce their carbon footprint, to reduce their CO2 emissions. Of course, the instrument to push industry in this direction is, of course, the CO2 allowance prices. You see how that has developed. Now we're in this period, we're around EUR 90 per ton of CO2 emitted. These levels were actually expected to appear, you know, 8 years from now in the 2030. We are all there. You know, we are already there. This is I think that as the biggest surprise for industry is that this cost has been really coming up.
You see that development on the left curve there from 2020 and now in 2022. Another, you know, just as an example, the price for metallurgical coking coke, you see how that has developed for the industry, not only the development of the coking coal itself, but also the share of the CO2 emissions, you know, the allowance you need to pay to use the fossil coke. Also on the natural gas side, of course, we all know why this, the natural gas prices have been skyrocketing in this period. Of course, we signed up contracts with the industry long before we saw that increase of the CO2 or the natural gas prices.
Of course, this is the economic realities for the industry, so they are moving. You know, these are the reasons why they are looking for technologies to replace natural gas and to replace virgin fossil coal. It could be coking coal, it could be other types of fossil-based carbon they are using. Of course, this creates the drive for Vow and Vow technology. We announced earlier in February a joint LOI together with Vow Green Metals and an undisclosed large player in the metallurgical industry space. This just demonstrates that we're not only talking about volume and that project, we're talking about now a potential new project.
A client that came to us, they saw what we were talking about in Norway, and they said that they wanna, within 2025, replace 50,000 tons of their fossil coking coke in their production. I'm just demonstrating what that means for Vow as a technology provider. We saw that the contract we were awarded earlier, you know, in, during the fall of NOK 215 million for Vow to the Follum project for Vow Green Metals. This contract is five times larger in terms of the complexity, in terms of the number, you know, of lines. This is, for us, we estimate, a value of a project like that to be around EUR 85 million-EUR 100 million.
If we would meet the target to have that operational for that client in 2025, it means that 2023 and 2024, we would need to deliver process technology in that size, you know? This is the accelerator we're talking about, how Vow Green Metals will enable the rollout of factories, and we will deliver technology. That means that we will get the revenue long before Vow Green Metals get the sort of revenue from producing biocarbon and producing the gas.
Of course, just to demonstrate the economics here, you know, a plant, you know, with the prices I showed you on the last slide, a 50,000-ton biocarbon production would replace fossil coking coal that today, the cost is EUR 37 million. It will produce gas that could potentially replace natural gas worth EUR 32 million. There are sort of strong numbers making these cases bankable.
We really, you know, believe that we now have made it possible to take a position towards the metallurgical industry and roll out factories. This is sort of, let's say, to try to give some insight on that LOI that we announced earlier this month. Of course, I think that we didn't expect previously that the gas side, you know, this is sort of the beauty of this type of technology. We produce biocarbon and we produce gas. We didn't, you know, expect that the market would be so interested in the gas.
This is just showing the amount of natural gas used for industry in Europe today. It's around 1,000 terawatt-hours of natural gas. You can see the different segments of European industry and you know, just to illustrate where we're working, you know, seeing these logos of the companies that we're working with, you know. Repsol within chemical and petrochemical industry, the energy side. It's of course the biggest consumer of natural gas. Philip Morris and Circular Carbon within the food and beverage, and of course, the iron and steel and non-ferrous metals is also sort of where the natural gas is consumed.
What this opens up is that it secures a revenue stream from the gas, not only for the biocarbon. It gives us a flexibility when we talk about rolling out technology towards different industries, because we can combine it. It means that we can. As an example, while Green Metals could build factories, infrastructure to supply natural gas or not, to supply carbon neutral gas that replaces natural gas to industry, to one industry and produce biocarbon towards another industry. This is sort of it's a really just showing that this is relevant, the gas is relevant and definitely it's just making our you know the business models better.
Of course, it's also interesting to see, you know, what we have done with Philip Morris International, what we have done with Circular Carbon. We are in a way producing gas off grid. We're using waste streams at these different industries, and they're using that waste streams to produce gas that replaces natural gas. Of course, what if we could start producing gas towards the grid? Some years back, the ambitions we got was from a cooperation we've had with GRTgaz. This is, you know, the second largest gas distributor in Europe. They came to us some years back and we established a project we called Syntain.
Syntain was to produce pyrogas or, you know, syngas from pyrolysis and to methanize that into CH4 or into methane or climate neutral methane for direct gas grid injection. GRTgaz wants to replace natural gas. They, being a large gas grid owner in Europe, need to decarbonize. When they see EU Green Deal, when they see Fit for 55, they need to decarbonize. They need to come up with solutions how to decarbonize the gas grid. One way to decarbonize the gas grid is to use what they call pyrogas. Pyrogas from gasification or pyrolysis. You see on the right side here, they entered into several projects with suppliers. One of those were the Syntain project with ETIA and us.
ETIA being the subsidiary of Vow in France. Today, actually, I'm proud to say out of all these projects, there are only two that have demonstrated a technology working, and one of them are Vow. Of course, that's what basically GRTgaz announced as a press release in France yesterday, that we're moving forward with the technology and now to produce renewable methane for gas injection. That really opens up an opportunity. Then if you look at it, you know, they within 2030, their ambition is to replace 6 terawatt-hour with pyrogas.
If you, in a way, would go back to the project that talked about in the metallurgical industry space with 50,000 tons of biocarbon, a plant like that that would produce biocarbon towards the metallurgical industry could also, you know, 30 of these plants could meet sort of the 6 TWh of renewable methane to inject to the grid. Of course, if you look at it's actually. I'm not gonna go into that today, but if you look at how much CO2 you're avoiding and replacing towards the metallurgical industry doing that, and how much you're actually avoiding by producing a biochar as a soil enrichment, and also how much CO2 you're avoiding from not using natural gas.
You're talking about, you know, if you would meet, you know, 6 TWh, you would be avoiding 4.5 million tons of CO2. That would be an investment around NOK 30 billion. Just draw a you know, compare that, benchmark that to the Longship project in Norway, where now you're gonna use more than NOK 20 billion, and there we are avoiding around 800,000 tons of CO2. This it just demonstrates that pyrolysis is a solution, a relevant solution for decarbonizing industries in Europe. You know, while in the carbon economy, what are we doing, you know? We are of course, we said in the newspaper this morning that we are still sort of a company in the marine industry.
It says that we are a technology provider in the marine market. We are definitely moving onshore, and we are definitely trying to take a position in the land-based carbon economy. What we're basically doing, you know, working to decarbonize industry and working to recycle carbon, but because that's what we basically are doing. We're producing carbon from, you know, recycled resources instead of using virgin fossil carbon. If you look at it, you know, these are relevant for the metallurgical industries that we've been talking about. We're looking at graphite for batteries, and we're looking at carbon black for industries, and we're looking at biochar for soil enrichment.
The carbon eco-economy here, you know, with the technology to produce advanced circular carbon material, this is really the future we see, and that's where we're moving. Of course, the Kindred, you know, we are also producing climate neutral gas, and that's for on-site, off-grid, helping industry to convert waste, but also to now work with renewable methane towards the grid, and also syngas to different types of chemicals, and we have some interesting projects to talk about going forward within that space. This is really positioning Vow as a company in the new carbon economy. With this, I would like to conclude. You know, we're gaining speed. 2021 in brief, we delivered a solid operational performance and a significant valuation through the successful launch and spin-off of Vow Green Metals.
We record a high order backlog, and now I'm guiding a bit, you know, provides a good visibility into 2020. With what the backlog and the pipeline we have, we really estimate now are nearly to double our revenue in 2022. Cruise is bouncing back as cruise operators continue to renew and upgrade their fleets, and demand for after sales continue to increase. We now see that we expect that the after sales we had back in 2019, we are, you know, we have that business returning in full, and even the potential to go higher because more ships. Of course, we need to remain relevant with technology. I'm often getting that question, you know, do we have the right technology?
I would say, you know, we are, you know, in our business, we are investing every year to make sure that we have relevant technology. If you see our R&D expenses every year, you see that we are really doing that to make sure that we are also relevant going forward to, you know, produce advanced carbon products and climate neutral energy for industry. That's what was what I had on my mind today, what I wanted to tell you, and we're now opening up for some questions. Thank you so much. Yeah. Jacobsen from Nordea.
That's correct. Your revenue seems to pick up quite nicely. Can you comment on the margin development in light of increased raw material cost and energy prices?
We have actually. If you see that we have had pretty stable margins in the, you know, project part of our business, you know, cruise project part of our business. We haven't had any contribution from after sales, no contribution in margin from land-based, and it has been sort of with those business areas not contributing, we have had really relatively stable margins within the cruise industry side. We have, of course, been working with the supply chain, and we haven't, Erik, you might also comment on that. We feel that we have pretty good control over the situation with the raw materials, et cetera.
I think that, you know, all in all, the contribution margin from product cruise is around 33.6% for the year in 2021 in total. We do see certain higher freight costs and material costs on, let's say, a certain 5-6 projects which are specific. It's not a big factor for us in this more in the second half than in the first. There's also a difference between the composition of projects, sister vessels and others.
Mm.
I think, all in all, we looked at it, and it's the freight and the material cost increase compared to earlier prognosis is around NOK 3 million for this half year in total.
Mm-hmm. I think that an important you know comment to it is that you know when we work with the cruise industry, we have a lot of sister ships. We have an efficiency improvement ship by ship. Of course if every project for us would be unique, of course that is a different situation. But we have been able to take out you know synergies when we are. You know, if you look at, I think Viking Ocean is that the twelfth vessel we are delivering technology to you know on the same platform, same series over the years?
Of course that is the strength of that type of business model and that type of market that we are delivering so many of the same ships and we are able to keep you know the control over the cost and demonstrate. You know, we have demonstrated that over time that our margin have been high and stable.
Just to add on that, we do see with regard to delays in the supply chain, what we see is that there is, as other companies, there is on the electrical components, we do see certain delays for the cabinets that we use. But that, what we do there is that we agree with the yards and we supply the equipment, the basic equipment. Then we supply later the electrical components. That means that we can keep the delivery schedule, and we can also invoice according to our plan. Then those elements are just added on later. That's where we see the supply chain delays that the rest of the industry is seeing is basically on the electrical components.
That hasn't been a big negative factor for us. We try to work around it and
Overall, no project have been. No ships have been held back from the yard due to too late delivery of electrical components. Most of that is easy to take on board and during commissioning. That's where, how we have managed it.
On the renewable natural gas, are there any limitations to what kind of waste you can use? I was particularly thinking about the agricultural industry and waste from manure, for instance.
You know, the thermal process of pyrolysis could convert all kinds of biogenic materials. It will be dependent on what kind of carbon product you would produce. We see that demolition wood, forestry waste is a good feed for producing metallurgical, you know, renewable coke. If we would produce biochar for soil enrichment, we would use sort of that type of agricultural waste streams. It's interesting to see now because EU is now opening up in a larger scale to use sewage sludge for biochar production and to get the CO2 offset credits, and to include in larger, you know, hopefully now that they are allowed to use that as soil enrichment.
You know, you have different types of industries that have different types of waste streams. It's all about energy because all these type of you know, waste streams would contain a lot of energy, and that energy will either be you know, converted into a carbon product or a gas product or even condensates as oil. You know, it's interesting to see how many different business models we're looking at, how many different markets we're in, where we're looking at how to valorize these different types of waste streams, all the way from end-of-life tires.
That's a very interesting space, and I think that we are one of the few that have now a demonstration plant working in U.K., and we're really looking at that. That is sort of a large amount of granulate tire, you know, recycled tire that we can produce recycled carbon black.
Mm-hmm.
In Europe now, I saw numbers from, well, Vow Green Metals. They said around 52 million tons of biomass available for, you know, from demolition wood, forestry waste, and different types of RDF products that could be moved into producing biocarbon towards the metallurgy industry. It is many opportunities within this space. Of course, that's the question we often get when we, let's say, are now looking at producing, you know, renewable methane to the grid, you know. Is there, you know, waste and biomass available for this type of transition? We definitely see that there's a substantial amount we can use here.
Mm-hmm. Thank you.
Mm-hmm.
There were two questions in the audience. I think we could take those first.
Thomas.
Thomas from SpareBank 1 Markets.
Yes. Hello, and thanks for letting me ask a question, and congratulations with a good quarter. Just one quick question on cruise before we move over to land-based operations. Will that Q4 EBITDA margin of around 18% on cruise projects bounce back to above 20% in 2022, or?
Well, the cruise project was higher.
Yeah, in Q4.
In the, in the Q4-
I extracted kind of just based on.
Okay
'Cause you had significantly higher margins in Q3.
Yeah, I think that, you know, I think that what we're looking at is that for a year at the EBITDA margin of around 24% for cruise projects is the level going forward, something between in that area. Or that will be. Ideally, we would like to get it even higher, but I think that's a more kind of.
You could have some effects of, let's say, as Erik was mentioning, that you, in the entire project portfolio, have different projects with different types of gross margin. That could be even projects that we have taken at a lower margin, not necessarily an effect of increased cost. Or the overall, you know, year performance you see, it's on par with last year. But you could have, in quarters, for example, more revenue recognized in a portion of the project portfolio that could have a lower margin. I think that what basically could affect the fourth quarter. It's not a trend that we now would expect the margins to go down.
That's not what we're seeing.
Okay, thank you. On the other side, positive side here, the EBITDA margin for land-based operations were already 12.5%. Could you touch a bit upon where you believe those margins will be when you're kind of delivering on the Vow Green Metals contract into even greater extent?
We expect to deliver once we get the top revenue line up to carry sort of the fixed cost of that part of the operations. We expect the EBITDA margin to be solid. We don't see why the land-based side would deliver lower than the cruise industry space. Looking at the economic realities with increased CO2 prices, the value of the gas, the value of the carbon comes up. I think that it means that we should take out value and margin from that momentum now.
Mm-hmm
going forward. We're not moving into land-based markets where we see sort of low margins and you know, very high competition. That's not what we're seeing.
No. Then one last question. Could you touch a bit upon if you expect to first deliver the whole land-based backlog in 2022, and a bit on the distribution of the Vow Green Metals order throughout the year or first half year?
I said that we would deliver all the process equipment for Follum in the Q2 and Q3 this year. It means that what we're left with then is the commissioning and the start of such a project. Dependent on when the equipment will be, you know, put in operation, then we will have the remaining normally 5%-10% left of the contract.
It could be. I think that there will be a certain element in 2023, of course, a revenue recognition from.
From the startup.
Okay.
Well, you know, we recognize some of it as revenue in the 2021 numbers, but most of it will be in the 2022 numbers.
Okay. The backlog as a whole, do you expect to kind of turn over the whole backlog on land-based operations in 2022, NOK 270 million-NOK 280 million?
On the land-based side?
Yeah.
A large part of that will come off as revenue.
Yeah.
Yeah, I think that the land-based Vow Green, they have a shorter production-
Mm
Delivery cycle than the cruise partner, which go over 3.5-4 years.
Mm.
This is like, I think having maybe one to 1.5 years.
Mm. Mm.
With the Vow Green Metals order, of course, bigger. That also, as Henrik said, we will deliver all the equipment during Q2 and Q3 this year.
Okay. Thank you.
Martin from DNB.
Yes, Martin from DNB. First question, could you elaborate the split of the revenues guidance for 2022? You estimate around NOK 900. Is that solely based on what is in backlog today, or do you include-
There is a pipeline there as well. Of course, not everything is signed and sealed, definitely. We do see that, you know, in that evaluation or in that estimation is definitely what we have insight into on the firm orders and of course our pipeline on the land-based side.
Is it also possible to get some split of the guidance?
We haven't done that now. We will consider. I think that we are planning also a Capital Markets Day during the spring now, and then we will give more insight into that. Of course, what we do see is that the land-based side is becoming sort of a large part of our revenue. The question is how fast will land-based you know get to the cruise business level and when will we pass it?
Mm-hmm.
You know, definitely we do see in the cruise industry, we have sort of a level now. What moves that level upwards would be more retrofit contracts. What moves that further upwards would be, you know, not only wastewater purification retrofits, but also within waste to energy and waste valorization, such as the pyrolysis systems. We have now actually, you know, now in the first half of this year, we will deliver to the yard the first microwave-assisted pyrolysis system to one of the largest cruise ships under construction. I think that is sort of a milestone for us when we now are delivering that type of technology also on the cruise.
Of course, that will create a growth within the cruise industry space. Of course, looking at the land-based and looking just as you know Vow Green Metals, how that is an accelerator for us and just the second plant, you know, if we can realize that project within the next two years, you see how large the land-based side will, you know, how fast that will pick up in volumes.
In terms of the Follum plant, could you comment on the expected movements in the working capital and how we should think about that?
The movement of working capital in our project. It's fully financed, you know.
Yeah, I think that, you know, could you have an advance payment from Vow Green Metals received as we normally do on land-based? I think it will be quite. Follow kind of a milestone schedule.
Mm
Where this will be quite similar to the other land-based projects we have.
Mm. Mm. Mm. Mm.
There is a certain advanced payment received already.
Mm. Mm
... to because it's a very big project and the supply base we have will-
Mm
will also have a kind of
Mm
advanced payment.
Anyway, we see now we are, you know, sufficiently capitalized in the business now to take such orders. We increased our borrowings and our line of credits with DNB. The business we see now and to deliver on the order backlog in the pipeline, we are sufficiently capitalized to do that.
Lastly, on the S4 for undisclosed project with potential up to 50,000 tons, could you comment on how this differ in terms of the input, so the cost for the feedstock? Is that big difference compared with the Follum plant or how should we think about that?
Well, I think it's comparable numbers actually. Of course, now this project is being developed, and of course an important milestone here is to create this carbon product that the industry can use. We're working on that. This is a unique metallurgical process where you need a certain reactivity on the carbon. If it's too reactive, it means that you're not able to get the carbon into the melt before it's sort of burn off as CO2. So that's what we're working together with the client on. And once we have sort of made that together, you know, the schedule is to start producing in 2025.
This is a very ambitious player in this space. I can say so much that 50,000 tons is not their total consumption. You know, that's not their total consumption. This is a player that uses substantially more. You know, 50 is considered a start.
Okay. Thank you.
Do we have any questions from?
Yeah. We still have fairly large-
From online.
We have a large crowd listening and watching, and a few questions. Should we start right away with those?
Yeah.
Yeah.
Why don't we try?
So first-
At least try to answer them.
We'll start from the top. With regards to the GRTgaz Biogas project, do you think that could turn into a letter of intent or a firm order in 2022?
No, I would say that what GRTgaz is, you know, that corporation is all about demonstrating the production of renewable methane from pyrogas. That will mean that the part that GRTgaz would contribute in that project is the grid injection. It means that they are a gas grid provider. With a successful, you know, production of renewable energy, it will allow us to look at, you know, offering that as a solution when we, for example, are selling the Vow technology to a client. It means that GRTgaz will probably not be buying technology from us. That's not what the purpose here is.
That the purpose is that this is a, they will assist with sort of the grid injection, and they want to offer that as a solution. You know, working with GRTgaz on this also is a way to, for example, if Vow Green Metals as an example or any other type of build own operator would then see that, okay, let's build a factory, you know, these type of factories in France along the grid of GRTgaz. They want to get as much climate neutral gas into that grid. They want to make sure that we can connect to the grid.
It's just that it, you know, it's a way to prove the economic model of, you know, who will invest in this technology. Because now they say that, okay, they will, by connecting the methane into the grid, the renewable methane, they have a revenue. They can sell the gas on the long-term contract. It's, that's the type of enabler, you know, GRTgaz will be in this case.
Thank you. There's a follow-up on the biogas. How is biogas treated in the EU Taxonomy? Is it classified as a green solution? Would you know?
Yeah. The pyrolysis gas and the biogas, it's considered a climate-neutral gas, and that offsets and replaces, let's say, fossil gas.
There's a question regarding the cruise business and how the summer season is looking. When do you think margins could return to pre-pandemic levels in aftersales?
In aftersales?
Mm-hmm.
We saw that 86 ships are back in operations. It looks good that more ships will come into operations and we'll see that the cruise industry is very sort of optimistic. Then if you look at these cruise magazines, the reports, more and more now listing, you know. Of course, Norwegian Cruise Line, Carnival, Royal Caribbean are now announcing when there are sort of how many ships they are now putting back into service. With that being said and with that being seen, you know, we truly believe that that part of our business is returning and with the same sort of margins we had pre-pandemic.
There's one final question from the online audience, and that goes to the guidance for 2022. You indicated revenues of roughly 900 million NOK. Should we expect similar group EBITDA margins as seen in 2021?
If you look at what you have to take into account that we haven't had any margin contribution from a land-based and aftersales. It means that when you grow the top revenue line and when aftersales is becoming sort of going back to normal and land-based are becoming a dominant part of that revenue mix, of course, that will have a positive impact on the margins.
Okay. Thank you. There's no more questions from the audience online.
Thank you so much. You know, to the listeners online and to you here in the audience, thank you so much for the attention.