It's with great pleasure I welcome you to this first half year presentation for Vow. I'm very proud on behalf of the entire Vow team to present our best ever highest revenues, highest profits, and highest order backlog. Since we are webcasting this presentation, I would also like to start off with sort of a short elevator pitch on Vow as a company. We are a company that provides technology, world-leading technologies to eliminate pollution, to enhance circular economy, and to mitigate climate change. We offer patented unique technology to turn waste and biomass into CO2 neutral energy, into decarbonized energy, low carbon fuels, and biocarbon. We have over the years proven our ability to develop technology for complex industrial applications, and we have been doing that for many years jointly together with our clients.
We have a strong order backlog with large industry clients and an installed base that provides over the years recurring revenue for us. On the right side, you see the logos in the Vow Group, Scanship, a company that works in the cruise industry space that are market leaders in the cruise industry. We have Etia, Ascodero and C.H. Evensen that works on different land-based markets. We also have the Biogreen, a very strong brand within pyrolysis in Europe and United States. Some key figures on the business. We are well established with a proven delivery model, and that's also sort of demonstrated by the numbers we're providing today.
Technology provider, solution provider, we have more than 117 patents, and we have also new technologies that we have pending patents on. We have in our sort of intellectual property right portfolio, we have 45 technology applications. We have more than 4,450 references in many different industries. We have a strong order backlog, as I said, with now the delivery of 144 systems to be delivered to market over the next 3-5 years. We are growing. Today, we count 238 employees in the group, operating out of six countries. We are now at four sites in Norway. We are with two sites in France, we're in Poland, we're in the U.S., and we also have people working out of Italy and Canada.
We, of course, are very cautious as we are deploying technology at different sites around, you know, the ambitions to have sort of zero incidents, you know, zero serious incidents. The HSE is rooted in our business. We have a net zero ambition, and we are, you know, working with our clients, helping them to become net zero as well. Our ambitions also on the gender equality. More and more women are joining, and that's good to see. Let's talk about our performance the first half year. Key takeaways, it's the highest ever revenues, profits and order backlog, as I said in the opening statement. We are doubling our revenues to NOK 400 million. This is from sort of a positive development in all business areas.
The land-based revenue side is becoming the biggest business segment for a while, and it's increased 4 times compared to last year, same period. We is happy to see that cruise is back, and we are now back on pre-COVID levels when it comes to the activity level, supporting the cruise industry with operational services and operational consumables. Projects continued in a steady, very steady course. Profits improved by great team performance and efficient delivery model. I of course have separate slides on each business area where we're gonna dig more into details on that. Overall, EBITDA more than doubled to NOK 53 million, and that's an EBITDA margin of 13.3%. Total order backlog increased 32% compared to the same period last year to a record high NOK 2.2 billion.
That also includes optional contract for NOK 844 million. Now that's sort of those optional contracts are related to our cruise industry activities and specifically the new build contract portfolio as those contracts we have with shipyards are mirrored with the contracts between shipyards and ship owners. They're securing future slots and have options on future deliveries, and that's also in our contracts with the shipyards. We do see that industry trends supports continued growth in demand for Vow solutions, both at sea and on land. I will, in the last part of this presentation, talk more about these type of trends that are sort of very relevant for our business going forward.
Looking at these numbers, and the development of those, on the left side, you have the revenue, and you see the revenue split between the three business areas, how we report them. You see reaching NOK 400 million now in the first half this year, and you see the last ever since the first half of 2020. You see a very nice development. You see, of course, to a large extent dominated by the increase of activities on land-based, up to NOK 184 million of revenues. Good to see that the after sales activities in cruise is returning to pre-COVID. Of course, solidly, we are delivering strong, within the cruise project we have in our portfolio. Margins is, you know, very much picking up.
That's because now we have not only cruise projects through the COVID period, where we have been profitable within that business segment. Now, the profit returns in after sales, and we have a strong delivery and profits on land-based. Of course, that is why we see this very good development on the margin side. Also a nice development on the order backlog that provides a very good visibility for the business. Good for us to plan our business going forward. Land-based, as you see, we're now talking about the land-based as the first business area, because this time, it's 46% of our revenues in the period. It's become the largest, as I said.
We are now consolidating for the second quarter the numbers for C.H. Evensen, the company that we acquired in the end of first quarter. That's consolidated in NOK 16 million revenue in that business. Evensen is actually doing excellent. They are growing. If you look at just the order intake now, it's double what they had last year. It's a very nice development with that business unit. It's very happy to see that growth.
We see sort of a huge interest for that type of technology portfolio towards many different land-based industries in Europe that seeks to electrify their heating processes and to have sort of combination of running high temperature processes with either renewable gas or electrified, as opposed to what they're doing today with natural gas. The industry is now really moving on finding alternatives due to the situation with the gas supplies, the gas constraints, and of course, tremendous increase of gas prices over the last months. We are happy to announce in May a large new contract in the U.S. It's a $27 million conditional contract, I would say. It's pending on local permits in the U.S.
It's sort of a typical. I think that's all the renewable project you will find around in Europe and United States are a bit pending on local permits. We've seen that in Norway, for example, if you look at the wind energy side, it's. It has been difficult to deploy. Here, when it comes to our system to be deployed in U.S., it's about emissions from the gas we're burning on the boilers. We are doing the engineering. Part of the contract, we are sort of doing the engineering and that's. Some revenue in the first half year is related to the engineering part of that project.
You see, the EBITDA improvement from the first half 2021 to first half 2022, it's almost NOK 33 million. We're happy with that. Still, we don't meet the EBITDA margins of the cruise. That's sort of 24, in the 24% environment. This is also because of, as I've said it many times, we are scaling up our activity towards land. Of course, the more volume, the more revenue we have, we are likely to meet and beat the numbers we do in cruise. For the period here, with that revenue, we're happy to see an EBITDA margin of 13.5%. The backlog is NOK 512 million in total. The picture on the right side is actually one of 12 pyrolysis reactors for the Follum project.
A part of the revenue for the first half is on the equipment that we have produced and are producing, and to be delivered to Norway, for the Follum, the Vow Green Metals Follum, factory. Project Cruise keep on delivering very strong within that business segment, dominated by deliveries to the Cruise new building program. But also in this, we also have revenue from retrofits. We're doing three retrofits in the period, two with the Carnival Cruise Line and one with Royal Caribbean. I would say we are delivering according to plan. You see the solid EBITDA margins throughout the period. This time around, we're 24.1%.
It's a very good strong delivery, and we have sort of been mitigating inflation. We don't have any constraints in our supply chain. That means that we have been able, through that period we've been through, to deliver to the yards on time. Of course, if you look at many other industries faced with huge increase on materials and of course, also constraints in the deliveries, we haven't experienced that. I think that's because of course, we have a lot of replications. We're delivering to the same new building programs. We have been able to secure our components over time, our manufacturing over time.
Of course, it comes out with strong margins, and we keep on delivering that. The backlog in that business area is NOK 888, and that's for a relatively large new building program where we will have revenues well into 2025 on those projects. 42% of our total revenues. On the right side, you see under construction at Chantiers de l'Atlantique in Saint-Nazaire, close to Nantes, where that shipyard is building, have a large program for Mediterranean Shipping Company, MSC Cruises. This is for the new World Class that we signed up a couple of years back. This is MSC World Europa.
World Europa is the name of that vessel, and this is fully equipped with our technology on board. We do wastewater purification, we do garbage handling, we do food waste processing, and we take care of all the biogenic waste coming from these main waste streams on board. After-sales cruise, as expected, activity in after-sales is coming back. During the second quarter this year, most of the ships are back in operations and fully deployed. We see that in our numbers.
If you look at the graph on the illustration on the right side, when we delivered our fourth quarter in 2019 pre-COVID, we had NOK 33 million per quarter, and we had NOK 126 million in total. Now on the second quarter this year, the first quarter, of course, still there was some restrictions on COVID restrictions applied. On the second quarter now, you see we're back on NOK 29 million, and this is only growing. Just to remind you that in this period, the last two years, we have increased our installed base with around 12%-13%. It means that our addressable market within after sales is also increasing.
We are also working to replicate this type of activity more now on land-based. We see that, of course, land-based here is, or the after sales here is predominantly cruise. Of course, we expect to do as well when we now, to a larger extent, get sort of the land-based systems operational, and we can work with clients on land on operational support and operational consumables. 12% of our total revenues, and back in time, that was a third of our business.
It means that, going forward, providing operational support, working closely with the owners of our technology that our install base, it will be an important part of our business and it's also, I think, to a large extent explains our strong position in cruise that we are working so closely with the shipowners. It's a model that we should replicate definitely on land. Okay. Talking more about the trends, of course, this slide is a repeat. I've talked about this many times, but there are some changes for sure. We are positioning this business to become more and more relevant in the bigger picture. It's circular economy for sure.
We have a lot of projects that are related solely to the circular economy, and of course, circular economy plays a role in mitigating climate change. It plays a role in reducing CO2 emissions. But also, I would say regulations are now coming into play in Europe, stronger. REPowerEU is the new five-year plan to even speed up Fit for 55, to become more independent of the Russian gas. In this plan, REPowerEU, what's particularly interesting for us is the ambition to increase the production of biogas in Europe. Today, Europe is producing biogas around 35 terawatt-hours, but less than 10 terawatt-hours is actually converted into renewable methane. The ambition the next five years in Europe is to increase this to 350 terawatt-hours renewable methane biogas.
This is said to be part, sort of, nearly EUR 40 billion of investments in Europe, a part of sort of their program. The total REPowerEU is a EUR 200 billion investment. It's a large part and actually when it comes to the amount of terawatt-hours of energy from biogas, it's actually higher than the ambitions on the hydrogen. This is very important for Vow, and we're working now with clients to see how pyrolysis in larger scale will become more and more relevant in the picture of increasing biogas in Europe.
Of course, the energy security energy crisis scrutiny that Europe is now going through, we see that when we calculated business cases for our clients back one year ago, we had natural gas prices on, you know, EUR 25 per MWh. Today that's 200. It means that back in those business cases, the value of the gas that syngas would replace, you know, the natural gas that would be replaced would be less than one-third of the potential revenue stream for a facility with pyrolysis. Now it's more than 60%. The gas prices and the focus on finding ways to replace natural gas is actually driving to a large extent demand for pyrolysis going forward.
That's very good to see, and that's sort of definitely something that we're gonna pursue. Okay. How does our customer respond to this recent news and events, and you know, to see how our customers are taking concrete actions? I talked about it in the introduction, the Green Waste to Energy project in U.S. is definitely on something that is, I would say, a higher focus in U.S. I didn't mention that you know, the REPowerEU, the EU ESG policies are drivers, but also the U.S. Inflation Reduction Act now enforced in U.S. is actually important now because it's attractive to move towards renewables, and of course to a larger extent also circular economy solutions.
This is the contract in U.S. is definitely as a result of those kind of developments we also see in U.S., not only in Europe. I talked about the heat-intensive industries where Evensen now are sort of very relevant. You see the contracts so far this year within, you know, high temperature, electrified and high temperature processes with Evensen are now for us more than NOK 50 million during the first half year. That's a very nice development from last year.
We see that in the fourteenth of June, we informed about this Horizon 2020 program with Repsol, where Repsol in Spain has selected our pyrolysis technology as part of their technology application to convert plastics into olefins. That's, you know, plastic waste into olefins. What does that mean for us? It means that we are of course selected for an application that Repsol wants to develop not only for their own infrastructure, but Repsol is also licensing out technology to other players within the petrochemical industries. It means that not only can we deliver in the future our systems to Repsol, but also under that type of license program to a larger part of the petrochemical world.
We see, of course, natural gas. We work with GRTgaz in France because they have on the agenda to use pyrolysis gas to convert that into renewable methane as a way to increase the amount of renewable energy or the biogas in Europe going forward to the grid. We have recently, and I think that was one of the key rationalities buying Evensen was that they have been working also towards other interesting applications where pyrolysis is of interest. One is, for example, towards the battery side. They're talking about sort of the ambition to produce better batteries.
Not only a way where Evensen have technology on the calcination side to heat up and take out the humidity from, let's say, the fossil carbon that they're using to produce batteries, but also there are needs to recycle batteries in the production and in the end-of-life batteries. I would say the fourth point is also that there are development programs looking at biocarbon produced with pyrolysis as a first step to produce advanced material anode materials. We see definitely a lot of interest from that industry and that we are responding to.
Another interesting development is the cruise industry are now more and more looking at what we are doing on land with converting biogenic waste into energy. We have the MAP technology now being deployed on one of the biggest cruise ships under construction in Europe. Definitely, both Norwegian Cruise Line, Carnival Corporation, and Royal Caribbean are looking at how to deploy this type of technology on their existing fleet, but also on new builds. We, I think that we have received a lot of attention from what we are sort of doing on land.
Our clients are coming to us in that space saying that, "You know, we wanna try to now see how we could replace our conventional incinerators with this type of technology going forward." We are also within the circular carbon side working with end-of-life tires. We have now a full operation of our test site in U.K. The test site in U.K. that's together with Murfitts Industries. I talked about that many times. The outcome of these tests, we see sort of much more interest from that application, and we are sort of in bidding for projects at the moment. It's gonna be exciting to see how that and how fast we can develop that part of our business.
Of course, not to forget, a huge interest from the metallurgic industry space. Vow Green Metals have huge ambitions going forward, and that has sort of become a very large client of us. We also have this non-ferrous metal producer that we announced earlier this year, the letter of intent for a factory that is five times larger than the Follum plant. Of course, it's very, you know, a very nice development for our business. I would say that the team are very sort of busy now to develop these new prospects and hopefully we will have good news going forward when some of these are converted into contracts.
The summary, we are delivering record high, best ever revenues and profits. Land-based more than, you know, four times higher than we had last year. Aftersales back and continued high activity is within the cruise industry space. I would say we are progressing according to plan. We said it many times that we are delivering strong on the cruise industry side, the cruise projects. We are very concerned and focused on delivering profits, and we're doing that according to plan. I see that we are sort of efficiently mitigating cost increases and supply chain constraints. That's very good. Backlog strong.
I think that would be what we have demonstrated, that what we have communicated is that we are delivering large-scale technology, you know, delivering capacity that are relevant for industry. While Green Metals, when we communicated that we were building Europe's biggest biocarbon production, that was a strong message. When we acquired Evensen, and we put in work the construction of the biggest pyrolysis reactor to date, that would be sort of 5-6 times larger than we have for the Follum plants, the units we have for the Follum plants. It has sort of has been well-received by markets, and we see a lot of interest from big industry that comes to us. That's sort of definitely a different position we have today than we had six months ago.
Of course, industry trend supports a continued growth in demand for Vow solutions at sea and on land. Thank you so much for listening, and I'm opening up for some questions.
Hi, Turner Holm from Clarksons Securities. Congratulations on the report. I wanted to touch a little bit on the land-based segment first. I guess, you know, it seems like the issue in the land-based segment, I mean, it's performing extremely well. I guess some of that is driven by the delivery to Follum and the Vow Green Metals project. I just wanted to get your sort of thoughts on whether you think that that level of performance is possible to continue as we think out for the next half year, two years, and what are sort of the key items for maintaining the level of performance you saw in the first half?
If you look at the performance, if you look at the revenue growth, I would say that we have seen an increased interest from industries. Of course, we now are not only delivering to Vow Green Metals, we have the project in the US that, you know, given that the permits will be obtained, will have a huge impact on our revenue going forward. We're working with several others. I would say that new builds or the land-based side has become a large part of our business, the biggest now in the first half. We truly believe that we will grow that business going forward.
When it comes to profits, we see that the business cases and, you know, investing in this type of technology for industry, you know, the macros are becoming better and better. It means that we should be able to deliver good and strong margins on land-based projects because it makes sense from a financial point of view to invest in our technology. You see that when you see that the natural gas prices have increased ten times over just not even a year. When you see the value of biocarbon as a substitute to fossil carbon in many different industrial processes. You know, I see that as a lot of things supporting strong margins within that business area going forward.
Thirdly, I think that we come across as a company that are really a player and a relevant player for industry.
Just following up on that, I guess it's not only natural gas prices, but also coal and metallurgical coal prices have skyrocketed as well. I guess the type of product that is being delivered from Follum is essentially a replacement for that. You mentioned the potential 50,000-ton biocarbon project, which would be five times larger than at least the first phase at Follum. What's sort of the potential timeline for that? Are you seeing interest from, say, other players for similar type projects? I mean, just with the backdrop of this incredible move in gas and coal prices, and carbon prices for that matter.
Looking at the metallurgic industry space, there are interest from several other players in the Nordics and also in continental Europe. If you look at the LOI with the large non-ferrous metal producer, they have ambitions to replace a certain amount within a certain time. If that would move according to plan, it will have an impact on our revenues next year.
Okay. Touching then on the U.S. side, obviously a new landmark law signed just in recent weeks. It's just the mind-boggling numbers, $370 billion of climate and energy spending. There seems like there may be some new incentives for biogas in there. Are there any particular incentives for the products that you deliver in the U.S.? How do you see this new law potentially opening up the market for Vow in the land-based segment in the U.S.?
For us, the U.S. is a pretty new market for sure. We now had a commercial team working on land in the U.S. for the last sort of 18 months, I would say. The outcome of that is very positive with that first contract. I would say that there are a lot of industries and companies that are evaluating this type of technology to produce, you know, renewable gas to produce biocarbon. Biochar, as an example, is a much more mature market in the U.S. Biochar as a soil enrichment product. But of course, in the past it has been perhaps difficult to get the right prices on biochar to drive sort of these investment cases.
The investment cases have become much better, and the prices on biochar also for soil enrichment have increased. I can only sort of reflect on what our customers in U.S. are saying and doing and there are more interest and definitely they see access to, they have access to capital. You know, today we you know we have a lot of interest from startups that now have finances.
They claim to have financing in place to do investments, but also from industries that have, for example, the $27 million project in the U.S. It's from a business that have been working, have a strong track record, have been working for many years, deploying solar and wind. They are sort of converting some of their business segments into gas and biocarbon. They are sort of moving on that because they see they can, they are capable of financing that.
Uh, last-
I don't see anything else that is a contradiction or creating sort of not an interest for it, for sure.
Yeah. Certainly $370 billion can't hurt. I think we can agree on that. Last question from me is just on the cruise projects side. I think anybody who traveled this summer has seen that everything is very full. No different for the cruise industry. What's sort of the mood in terms of new builds there, right? Because most of the companies have most of their ships, if not all of their ships, in full operation. I mean, now that we have seen this resurgence in travel and I guess sales for those companies, what do you think the potential timeline is before they think about new orders and therefore, I guess, contracts for Vow?
It's an extensive new building program the industry has. There are in that you know contract portfolio ships that will be delivered in 2027 as well. We have contracts. You looked at the series that the ship that was for MSC World Class was also a ship the last in that series we delivered to market in 2027. We are discussing with several cruise shipyards and ship owners on projects to you know for 2026 2027 to start filling up. We mean that we have now revenues for some years on what was booked actually before the COVID.
Also if you look at our order intake last year was very large within cruise new builds. As the second year of the pandemic, we had almost sort of one of the highest order intakes in the history of our business for new builds. There hasn't been any postponements, there hasn't been any cancellations on the new build program. Of course, what eventually, when will the 2027 slots be filled up? I don't know. We for sure in our prospect portfolio, we're looking at 2, 3 series of vessels that, or let's say some of them are repeats just adding on. It's gonna be exciting to see when they call on these projects.
Thank you.
Thomas from SpareBank 1 Markets, and congratulations from me as well. Is the current backlog sufficient to cover the doubling of revenues versus 2021, or are you still in requirement of some additional orders?
We have a strong order backlog for sure. You mean if you want me to guide on the second half? I will not do that. Of course, we are working on a lot of projects. Let's see how that turns out.
A bit more specific question. As Aftersales has more or less recovered and the margins were around just short of 12% this quarter, which is somewhat lower than they were in 2019, is that due to cost inflation and higher costs on-
Uh, w-w-we-
The aftersales margins in Q2, like if I separate out the Q1.
No, that is sort of the issue, actually. It means that if you look at margins we have had in recent quarters, it's because we have higher fixed costs. When revenue comes up, we can cover the fixed cost.
Yeah.
I don't know if you want to add some.
To add to that, Henrik, you know, we are still not at the full pre-COVID level. Whatever the sales we get now and the contribution margins that will just go straight down to EBITDA. In a way, we have the cost base there. There's been certain cost increases, but whatever we get on revenue now, which will grow, it will go straight down to EBITDA, the contribution margin. That business area, Henrik, should have an EBITDA margin of 15%-20%.
It's not sort of long-term contract, so we're locked into sort of delivering on old prices. It means that when they are procuring chemicals or spare parts or whatever, it's the latest and greatest price that we'll give. So I think that we have been able to accommodate any higher cost on logistics and the material itself.
C.H. Evensen and on a standalone basis, what margins are they delivering?
I think, in the report, we say that C.H. Evensen has. It's a revenue level of NOK 60 million for the three months in Q2 and EBITDA at NOK 2.3 million.
Okay. Thank you.
As Henrik said, it's a positive and good start for us with C.H. Evensen.
Yeah. I say it's very good. You know, it's the way that business is developing now is it's
Great
More than perfect.
We are also, of course, integrating that business into our kind of present land-based business in Scanship and Etia in a way that will try to streamline operations, the purchasing function, the project management and everything like that.
Mm-hmm.
Yeah.
I had a question on the MAP system, and I see you had it on the slides already. I guess I can ask a bit more concrete question, like, when do you think the interest in pyrolysis for cruise vessels will turn into fixed orders?
When we met that Seatrade back in April, we saw a very keen interest from the industry. Everybody was back. I would say Carnival and Royal Caribbean and Norwegian Cruise Line were particularly interested in this. MSC, we see now, is picking up interest. We are doing feasibility studies with a couple of the cruise liners. In the past, they have been very innovative and capable of moving. I think that what that type of technology would enable the industry is to reduce landing of waste in a much larger extent, and they will eliminate fully sort of the discharge to sea.
Mm-hmm.
Knowing that the cruise industry is pretty much under scrutiny for many years, they are very eager to improve their environmental footprint. Now when the cruise is returning, they are working very much on sustainability. I think that this really fits their environmental ambitions, I would say. That explains their interest, and let's see how fast we are able to convert that into business for us.
Are there other talks of any regulations that will. Yeah. Cruise lines aren't allowed to incinerate their waste basically offshore, and if so, are there any-
The regulations have been there, of course, because that's the conventional way they are dealing with. You just have to imagine a large hotel with all this garbage. They need to process it. They are not able to land it. They have incinerators, but there are restrictions in operating incinerators, more and more. In ports, they are not able. Along certain itineraries, they are not able to operate. When they have, let's say, a system that is more considered sort of not an incinerator, but an energy-producing device in a way, that's of course what the industry is working for.
We have been working now to get the right approvals now for the MAP system, together with class societies, port state, and the ship owners.
Are there any other companies with such approvals on systems like pyrolysis systems on board ships?
Not at this size. We will continue now because the MAP system had one type of capacity. Now, the ships are getting bigger and bigger. And we want to deploy them on, you know, ships carrying 5, 6, 7- 8,000 people. That's why we see now that looking at not only the MAP but the Biogreen from Etia and the rotary kiln technology that Evensen brings along. We have a very, you know, good technology toolbox for the cruise industry. I think that we are in much better position now towards the cruise than we were in before 2019, so to speak.
Of course, if it hadn't been COVID, or you can only think about that, you know, if whether we most likely would have been much longer, would have had much better progress in deploying that type of technology in the cruise industry as well.
Okay. Thank you.
Hi. Sander from Nordea Markets here. I was wondering if you could put a bit more color on how you handle cost inflation and also the different type of contract structures, especially for-
Mm
for the long-term contracts.
Perhaps I gonna give you that opportunity, Erik.
Yes. Thank you.
He's taking care of the numbers.
Yeah. I think it's a good question. We do of course see cost increases, for instance, on freight to and from China, and certain materials. There's been kind of 5%-10% increase. We are doing several things to kind of mitigate and meet that. We do have agreements with certain of our suppliers that we split the cost increase. We also have focused on ordering goods and equipment quite much sooner than we had done before. We kind of lock in the prices on certain things, on a kind of key materials. We also are in a way.
We do see on cruise projects that the gross margin in the first half year 2022 is two percentage points lower than in the first half year 2021, and also the same on the EBITDA margin. That is an effect of, in sum, the cost increase and the inflationary pressures. I think we managed to keep the EBITDA margin at a good and satisfactory level.
Mm-hmm.
We have been up to 36% on cruise projects. You know, that two percentage point drop is kind of combination of different things. It's mainly that effect.
Yeah. Which components and parts do you typically see the most pressure right now and largest risk moving forward?
I think what we have, and the supply chain is the electrical components that we use part for our cruise projects. What we do with that is that we will deliver the main equipment to the cruise yards without those electrical, if they are late. The building process at the yard takes a bit time. When it's time to install our systems and do commissioning, we have those electrical components. In a way, we don't stop the building process at the yards. I think the freight, what we have seen actually is the sea freight from China, they were doing different things to. We might look at different setups using other companies in a way.
It's not a big part of our cost base.
When we recognize revenue, and this question is valid on the long-term contracts we have in the cruise industry. It means that land-based are more up-to-date because, you know
Yeah
You quote every project, you quote them now, and you make sure that you have the right cost structure. Long-term contracts in the cruise is of course what we're talking about here. Of course, it's we also have always improved our design and you can almost sort of imagine what kind of margin we would have been recording if it wouldn't have been for-
Yeah
For these effects that he's talking about.
I think the last element, of course, that we need to. We will have a system for communicating those cost increases to our sales department to move that into the pricing for new contracts.
Mm.
We also do have on sister vessels, you know, we will need, we are having price discussions with the yards on those contract levels because, you know, everybody is facing cost increases.
Mm. Mm.
That's also part of the process to kind of keep the margins both on the contribution margin and the EBITDA margin.
Mm-hmm.
Very clear. Thank you. I think that was all from me, so congratulations on another strong quarter.
Thank you so much. Any other questions?
We've had a couple of questions online. 3 questions. First one is, what are the after-sales slash consumables in the land-based segment? Will the after-sales to land-based ratio be similar to after-sales to cruise projects over time or less?
It's, you know, to support those type of installed bases, or that type of technology would require consumables. We don't see why it's, you know, it should be on the same level, actually, going forward.
Next question.
Just today, now, what you record in after-sales, because the after-sales within land-based is very small today, and it will grow. Today, the after-sales, which we report in the segment, is basically more or less totally the cruise project, the cruise side. We have a small after-sales, very small, which is part of the land-based segment at this point.
Mm.
We will, going forward, factor that out.
Mm.
Yeah. Because, you know, the cruise part, they have the consumables is a large part of the after sales, of course.
Mm-hmm.
It is potential for us going forward, of course, when these get more and more lamb-
More of these systems operational.
Are there any news on the project with the GRTgaz?
What we communicated, what GRTgaz communicated, is that there's a test site in our facility in Compiègne, where we are demonstrating sort of the conversion of syngas into renewable methane. That's the next time there will be an update is when we have produced a certain amount of renewable methane. It's an ongoing project, for sure.
The last one. Given the acceleration in your business, do you need further capital? If so, what sources of capital are you considering?
Eric, the way we see it now, of course, that we have available cash. Our credit lines are not sort of what we said in the report, what we have available, around NOK 227-228 million. So that is sufficient for our ongoing plans.
Yeah. We do have the revolving credit facilities and also the bank overdraft.
Yeah.
We also now the group at this point has a book equity ratio of 42%.
Mm.
We have a net interest-bearing debt to EBITDA of well below 3. It is 2.6 on an LTM level.
Mm.
We do have, I think, also using the facilities would actually be a plus for us because it means we have growth in revenue, and we have business. The point is that we also have more, I think, more debt financing opportunities. Given that we're not highly. We have good equity ratio, and we don't.
Of course, when we deliver profits, we generate cash as well.
Thank you. Any other questions?
Again, thank you so much for.
Thank you for that.