Nekkar Asa

OSE:NKR

Earnings Call Analysis

Nekkar's Q3 Update: Solid Profit Growth and Strategic Acquisitions

In the third quarter, Nekkar reported a net profit of NOK 42 million, nearly doubling from last year, largely due to divesting two noncore businesses for NOK 213 million. Despite a revenue dip to NOK 140 million, driven by Syncrolift's lower project volume, the order intake of NOK 83 million indicates strong future demand. Key contracts secured include NOK 164 million with the Norwegian Defense. Looking ahead, Nekkar aims for over NOK 2 billion in revenue by 2027, focusing on double-digit growth and strategic acquisitions. The current backlog stands at NOK 700 million, providing visibility for sustained performance.

Strong Financial Performance in Q3

Nekkar showcased significant growth in its third-quarter results, achieving a notable net profit of NOK 42 million, nearly double that of the same period last year. This strong performance can be attributed to the divestment of two non-core businesses at a total enterprise value of NOK 213 million, alongside a promising contract recently awarded to its subsidiary FiiZK for NOK 100 million. Meanwhile, total revenue reached NOK 140 million, representing a slight decrease of 13% from Q3 last year, influenced by lower volumes in its Syncrolift segment. The EBITDA for the quarter was NOK 14 million, marking a decline from NOK 29 million in the previous year, primarily due to the reduced volume of activity within Syncrolift.

Earnings Per Share and Order Backlog

Nekkar's earnings per share saw impressive growth, rising to NOK 0.40 from NOK 0.20 year-on-year. This reflects an overall strong financial health with a solid cash position and no debt, which is crucial for maintaining operational flexibility. Additionally, the company reported an order intake of NOK 83 million during the quarter, contributing to a robust backlog of NOK 700 million. This gives a clear indication of future revenue stability, particularly as it does not yet reflect the recently awarded contract with the Norwegian Defense valued at NOK 164 million and another major contract option in Chile.

Strategic Developments at Syncrolift

As Nekkar's largest subsidiary, Syncrolift is pivotal in Nekkar's strategy moving forward. Syncrolift recently signed several key contracts, including a five-year service agreement with Dubai Maritime City, and is actively engaged in various tender processes due to rising geopolitical tensions, which may increase demand for naval support solutions. While there was a dip in revenues for Syncrolift due to some project losses earlier in the year, the recent award from the Norwegian Defense reflects a stable recovery pathway. The segment expects to benefit from a wave of naval upgrades and new builds with a forecast of NOK 2 billion in tenders to be awarded in the next two years.

Innovations and Growth Opportunities in FiiZK

FiiZK, which Nekkar acquired about a year ago, has undergone a successful turnaround. A new redesigned closed cage solution, Protectus, was officially launched, with an initial contract exceeding NOK 100 million secured with a prominent Norwegian fish farmer. This innovation is made timely given the environmental pressures on traditional fish farming methods. FiiZK is set to capture a significant share of the growing market for closed-cage technologies, with an estimated annual customer CapEx level around NOK 1 billion anticipated.

Future Directions and Revenue Goals

Nekkar aims to expand its revenue base significantly, targeting NOK 2 billion by 2027 through organic growth and strategic acquisitions. The strategic focus is to cultivate a balanced portfolio encompassing 6 to 8 operational platform companies while continuing to nurture the growth of existing subsidiaries like Syncrolift and FiiZK. Management believes that this targeted approach will result in a strong, diversified company with stable cash flows and sustainable growth prospects.

M&A Strategy and Financial Resilience

The company is actively pursuing mergers and acquisitions (M&A) as a means to bolster its portfolio. It has expressed an eagerness to integrate profitable companies with strong growth potential, while remaining open to turnaround opportunities, as was the case with FiiZK. Their robust financial position supports this strategy. Notably, their equity ratio stands at a healthy 65%, allowing them to pursue growth without compromising financial stability. The ongoing buyback program and use of treasury stocks signify a commitment to returning value to shareholders.

Earnings Call Transcript 2024-Q3

[Ole Hansen, executive]

Good morning, everyone, and welcome to this Third Quarter Presentation for Nekkar. I am Ole Falk Hansen, the CEO of Nekkar. In today's presentation, I will start with a review of the financial figures for the third quarter. Then I'm excited to share with you some strategic highlights for the Nekkar Group for the coming years. And as normal, we will round off with some Q&A after the presentation. So the Nekkar Group is growing and now consists of 5 companies in addition to the SkyWalker venture project. We are happy to welcome Globetech to the Nekkar family from the mid of August this quarter.

So let's look at some of the highlights for the third quarter. Nekkar reported a solid net profit of NOK 42 million, which is close to a doubling from last year's third quarter. The strong net profit results are positively impacted by the divestment of 2 noncore businesses in FiiZK, which was sold at a total enterprise value of NOK 213 million. Furthermore, FiiZK has recently received a breakthrough contract for over NOK 100 million for 2 closed cages to be delivered to a leading fish farmer in Norway in the coming year. And Globetech has now joined the Nekkar Group with a solid operations and good growth potential. The revenue in the third quarter came in at NOK 140 million, which is a slight reduction from last year's third quarter, and the EBITDA ended at NOK 14 million. The EBITDA margin is affected by lower volume in Syncrolift due to loss of projects earlier in the year.

The strong net profit results leads to a doubling of earnings per share compared to last year's quarter. Nekkar still maintains a strong balance sheet with solid cash and no debt. The order intake was NOK 83 million in the quarter, driven by Syncrolift business. This does not include a signed contract for shiplift and transfer system with the Norwegian Defense of NOK 164 million, which was awarded to Syncrolift in October. As mentioned, the order intake was NOK 83 million in the quarter. And as you can see, the good backlog of NOK 700 million provides good visibility for the coming quarters. On top of this, we have contract for the Norwegian Defense and also the ASMAR option in Chile, which are not included in the figures.

So let's to -- move to some business update, and we will start with Syncrolift, which is our largest company. Syncrolift has recently won several strategic new customer contracts. We signed a 5-year service agreement with Dubai Maritime City for their installed base of shiplifts and transfer systems. We signed a contract with ThyssenKrupp Marine Systems in Germany for upgrade of their ship transfer system valued at EUR 5 million, including options. And as mentioned, the contract with the Norwegian Defense for the Haakonsvern submarine base with a value of NOK 164 million. The tender activity remains high, driven by geopolitical uncertainty impacting requirements for Navy yards. For financials, we have seen a revenue slowdown for Syncrolift due to loss of projects earlier in the year and also some progress in existing project portfolio.

Followingly, the EBITDA margin is impacted by lower volumes in Syncrolift. In October, we finalized the handover of the largest shiplift project delivered by Syncrolift over time in terms of financial size. A 23,000 tonne shiplift was handed over to the client. And furthermore, we handed over the Cochin shiplift project in India in August this year. Syncrolift maintains the position as the only end-to-end provider of high-end safety and efficiency solutions to shipyards around the world. Being an integrated supplier of both vertical lifts and several horizontal transfer system makes Syncrolift uniquely positioned to improve shipyard efficiency and safety, and we are the only supplier with such an integrated solution.

Our last awarded projects like Norwegian Defense, PT Pal Indonesia and ASMAR Chile has all been integrated solutions from Syncrolift with lift and transfer system in the scope. Syncrolift is committed to the customers worldwide. We have over 200 shiplifts and transfer systems installed globally, and Syncrolift is leading in its approach to have local services offices in every major shiplift cluster around the world with 6 service hubs being represented on the map. Syncrolift is uniquely positioned to capitalize on growing naval industry investments. We provide modern and failsafe shiplift technology, and we are the only integrated provider of shiplift and different ship transfer system solutions. We are the market leader in naval contracts. For submarine projects, we have a 90% market share and 15 installed systems around the world. And some of these are highlighted on the slide to the right. The global defense market is expecting a continued momentum in the coming years, driven by political instability in the world.

On this slide, you will see several data points supporting this growth. Looking at the right-hand side, you see a recently published McKinsey analysis on the coming growth in the global naval market. We see that the spending is fairly distributed across the regions and that Asia Pacific shows above-market growth followed by Europe. This is positive for the outlook of Syncrolift. Recent contract wins underline Syncrolift's competitiveness in the naval sector. For the Norwegian Defense program at Haakonsvern, Syncrolift won a competitive government-run tender process with price and solution as the main selection criteria. And going forward, we see a good outlook for the activity level for Syncrolift, both supported by the backlog of over NOK 600 million, which does not include Haakonsvern and the ASMAR option and from high tender activity in the newbuild upgrade segment. And we estimate that tenders with a potential value of around [ NOK 2 billion ] are to be awarded over the coming 2 years. And we are still confident that Syncrolift will continue to secure a significant portion of these awards. So that was Syncrolift.

Moving over to Techano Oceanlift, which is our offshore lifting and handling technology provider. Also in Techano, we have still high tender activity, but new awards takes time due to limited track record with Techano. Revenue in the quarter is impacted by lower progress on the existing projects, which are mainly the 2 offshore contract projects for the Sefine Shipyard. Intellilift is our industrial software and automation provider. And Intellilift has received an additional contract from Hanwha Ocean for control system scope to an offshore drilling unit upgrade in the quarter. Furthermore, we are in the finalization of the InteliWell automation system being on trial with an oil company in the U.S. Gulf of Mexico, and we expect an outcome of this after the trial is completed at the end of this year. And the revenues in Intellilift are now primarily driven by external drilling projects.

We closed the transaction with Globetech 15 of August this year, and the financial figures are consolidated from this date and onwards. As the transaction was closed in the middle of the quarter, the contribution was NOK 9 million in revenue. Globetech is continuing its solid growth and has contracted an additional 20 ships since we announced the acquisition, now managing the [ IT onboard a ] fleet of vessels of 170 units. Year-to-date revenues for the third quarter are NOK 64 million, representing a solid 20% growth while maintaining its historical EBITDA margin of around 20%. Globetech is a new platform for Nekkar that we will invest in going forward.

The team has built a solid position within maritime information and communication technology, where we see multiple opportunities for growth and also synergies with other Nekkar companies. We experienced active markets and customers and underlying trends driving both organic growth, while we also see the potential for bolt-on acquisitions within this space.

Let's move to FiiZK, which we acquired about a year ago, and I'm glad to share that we have now completed a successful 12-month turnaround of the company. In September 2023, we partnered up with BEWI Invest to become joint majority shareholders in the company. The key value was FiiZK experience from having delivered almost 20 closed cages to fish farmers and completed more than 50 production cycles. We immediately started a strategy and execution plan to define the future of the company. Key focus were to optimize and improve the design of the closed cage solution. Furthermore, we wanted a strong focus on closed and semi-closed cages.

Followingly, a new CEO with extensive industry experience was hired in the beginning of this year, and we launched Protectus, a new redesigned closed cage fish solution this spring. Around summer, we announced that we have been successful in divesting 2 of the noncore business entities and a total of NOK 213 million in value was realized from the sale, which gives FiiZK a robust financial platform going forward. And now in October, we announced signing a customer contract of 2 Protectus closed cages to a leading Norwegian fish farmer, a contract way above NOK 100 million in total, which marks the new era for FiiZK and the new design.

So looking at the closed cage solution, which provides several key advantages for fish farmers. FiiZK has commercially ready solutions with good business cases for fish farmers to invest in. And if we look at some of the advantages compared to open-pen farming, reduced risk of escape with double protection. FiiZK has experienced 0 escapes in its deliveries in the past. Protection of lice with closed bag and pumping water from below lice belt. FiiZK has also experienced zero lice treatment processes in the previous deliveries. We see increased fish welfare leading to superior growth and quality, and we see also reduced risk of predators and jellyfish. And finally, improved fuel health as waste feed is filtered and collected and brought to the surface.

We believe there are significant growth opportunities to come in both semi and closed cage farming technologies. This analysis presents a yearly customer CapEx level of around NOK 1 billion before taking into account potential incentives from changes in regulations that are currently being worked upon. So all in all, we believe FiiZK is well positioned based on its track record, the new optimized solution and the market outlook. Furthermore, recent media articles supports FiiZK's strategy of more sustainable fish farming as seen on this slide.

Then we move over to the financial update. Firstly, revenue for the quarter ended at NOK 140 million, a decrease of 13% compared to the same period last year. Year-to-date sales were NOK 442 million, which is 12% higher than last year. EBITDA closed at NOK 14 million, which was down from NOK 29 million in third quarter last year, and year-to-date EBITDA is NOK 65 million versus NOK 77 million last year. As already mentioned, the EBITDA margin in the quarter are impacted by project mix and lower activity level in Syncrolift business. Q3 net financial items are driven by Nekkar's share of FiiZK quarterly profit with NOK 30 million. On this basis, net profit for the quarter was NOK 42 million, up 90%. A strong earnings per share of NOK 0.40 versus NOK 0.20 for the last year. And order intake for the quarter was NOK 83 million and a good backlog of NOK 700 million out of the quarter.

Moving on to the balance sheet. In the third quarter, our balance sheet was influenced by the acquisition of Globetech. The main part is found in the increase in intangible assets and goodwill of NOK 114 million. The financial assets are mainly related to the FiiZK ownership. As of the third quarter, this investment accounts for NOK 76 million.

Moving on to working capital. At the end of the quarter, we had a working capital of NOK 119 million, which is an increase of NOK 12 million compared with last quarter. And the working capital is mainly related to projects in Syncrolift and is expected to be reduced over the coming months as projects -- some projects are now being completed and trade receivables and accrued invoice production is converted to cash. Nekkar has made a long-term provision of NOK 34 million for the estimated cash payment related to acquiring the remaining 33% stake in Globetech expected to be made in 2028. There are no interest-bearing debt and a solid equity position of close to NOK 500 million, converting to a 65% equity ratio.

Cash from the business is negative at NOK 1 million in the quarter and the cash effect from the buyback program is NOK 11 million. The net cash effect from the Globetech acquisition was NOK 56 million, derived from a cash consideration of NOK 66 million to the sellers, less NOK 12 million cash at balance in the company at the acquisition date.

In summary, the total cash outflow in the quarter was NOK 68 million. And despite this outflow, our financial position remains robust. We are maintaining our capital allocation strategy, as presented earlier. Since we launched our buyback program in late August '23, we have acquired almost 4 million shares. Total cash spending related to the program has been NOK 38 million, and roughly half of the shares are now utilized as part of the Globetech acquisition purchase price. So this was the last slide in the third quarter presentation. And now I will move on to a strategic update for Nekkar for the coming years.

As a short recap, we have seen significant expansion of Nekkar business activities over the last year from being primarily a Syncrolift-only company with some R&D projects in addition at the start of 2023 to today's situation whereby both Techano Oceanlift, FiiZK and now also Globetech has been added to the portfolio. This has led to a nice growth in the last 12 months revenue from around NOK 500 million a year ago to close to NOK 900 million today, including the revenue from Globetech and FiiZK. Nekkar combines the strength of an industrial operator together with a long-term active investment mindset, which creates a distinctive approach in driving shareholder value.

Our core capabilities is complex offshore engineering and automation, combined with commercialization and scaling competence. We support our operating companies by promoting synergies across the group and leveraging our financial capacity to support growth and deliver value. We actively work with the companies with a focus on sustainable long-term value creation, enabled by our buy-to-own mentality and flexible ownership model. In sum, our industrial legacy and long-term investment approach makes Nekkar uniquely positioned to generate shareholder value also in the future.

Our strategic priorities towards 2027 can be summarized in 3 main targets. Our primary focus is ensuring solid underlying operations. This involves profitable results, discipline in capital allocation and strong cash flow generation. We are committed to continue growing our existing companies through continued development and organic growth initiatives. Furthermore, we aim to create a balanced portfolio by strategically acquiring new companies through an active M&A approach. We believe the current portfolio and mix of companies provides a good basis for continued value driven by growth. Both Syncrolift and the growth companies are well positioned to generate double-digit growth in the coming years to come. Nekkar has demonstrated effective capital allocation with strategic and cost-effective acquisitions. This slide highlights Nekkar's track record and approach to M&A, focusing on companies with strong potential and alignment with our long-term goals.

We acquire companies within our scope of technology and ocean-based industries and work together with the team to scale them as a long-term active owner. We aim to reach over NOK 2 billion in revenue by 2027 through a diversified and well-balanced solid performing portfolio. The foundation of our revenue ambition is to continue underlying organic growth and profitability in our operating companies. Further, we plan to expand to 6 to 8 platform companies, creating a more diverse and balanced portfolio.

So before we round off and move to the Q&A, I will make some conclusion remarks. We saw strong net profit in the quarter. Globetech is now part of Nekkar Group of companies with a strong foundation. The order backlog and also the tender activity creates good visibility going forward. And we are now glad to see several recent important contract wins for Syncrolift in the last months. And with FiiZK, we see a successful turnaround and a breakthrough contract for the new Protectus design, which will open up for new market opportunities for closed cage solutions.

So with this, we finalize the presentation and can move over to some Q&A.

[Unknown Executive]

Thank you, Ole. We received quite a few questions, I think, for the -- to do things in the right order, we'll do the questions related to Q3 first, and then we will do afterwards to the questions related to the 2027 ambition that you have just communicated. First, a question about FiiZK. Yes, I think this is more a clarifying question. Will you receive the NOK 213 million from the partial sale of FiiZK in Q4? But this is a financial effect because it's not a majority-owned company, right?

[Ole Hansen, executive]

Yes. So the transactions are executed and closed in the third quarter, whereby both the cash has been paid from the buyers and also the accounting effects has been included. And then it's important to note that we do not consolidate the FiiZK numbers. So for instance, the cash in FiiZK balance sheet is not included in Nekkar's consolidated cash. How we do it is that we include the net result as part of our financial items in the quarter.

[Unknown Executive]

Thank you. A question about Syncrolift. The service agreement with DMC included an innovative maintenance control system. Is that something you aim to do with other shipyards? And does that mean higher revenue than regular service agreements?

[Ole Hansen, executive]

That's correct. And it's a new approach to both servicing the customer and also to having an overview from both from the customer side and from the Syncrolift side in order to plan and schedule maintenance in the future. And this will also be part of other service tenders and other service jobs that we are working on at the moment to implement such solutions. And of course, I think the more closer you work with the customer and the more transparency and overview you have, of course, the more business opportunities could be created in the long-term.

[Unknown Executive]

Another Syncrolift question. For the second (sic) [ third ] quarter, the EBITDA margin is -- sorry, I guess this is specifically well for both Nekkar and Syncrolift. But for the second quarter -- for the third quarter, I think they mean, the EBITDA margin is lower than normalized. Can you explain this, please?

[Ole Hansen, executive]

Yes. So I think from what we see in the third quarter, the top line level is somewhat down. And of course, that also are reflected in the bottom line through a lower scale of business. And of course, lower activity level will then also impact the EBITDA margin somewhat. Having said that, we do not have any significant cost overruns in Syncrolift or any loss-making projects as such. But we see now when we have somewhat lower revenue and also that when we have finalized some projects at the end of the project execution schedule with somewhat lower progress than you have in other quarters. I think that's the main effects.

[Unknown Executive]

A follow-up question on that, on Syncrolift specifically. Do you believe that Syncrolift will deliver at this level? Or do you believe it will come back to earlier levels on margins and revenues going forward?

[Ole Hansen, executive]

Yes. I think what we have -- in the last months now, we have been successful in booking more orders. And of course, that's the key driver for lifting the revenues, both to what we have seen in previous quarters and also to provide growth. So I think continuing booking new orders will help us to build the bottom line also in Syncrolift with more activity level. And we are ready to kind of take on this volume. So now it's about winning new projects.

[Unknown Executive]

Thank you, Ole. A question about Intellilift. Regarding the Intellilift revenue, can you comment on whether this is just from the InteliWell joint venture? Or is it other revenue that is driving Intellilift, I guess, so directly to Intellilift outside the JV?

[Ole Hansen, executive]

For the third quarter, as I mentioned, the majority of the revenue are drilling projects. And actually, the main revenue driver are the projects to Hanwha Ocean, the Korean shipyard for doing upgrade and change out of control system for one of their drilling units. That's the main driver in the third quarter. And then, of course, there are some InteliWell revenue from the first rig being on contract. And then, of course, we hope to see the next rig come on contract from very soon.

[Unknown Executive]

Thank you. Another question, a question about Techano. For Techano Oceanlift, are there mainly delays in the discussion that takes time regarding contract awards or have there been lost projects as well?

[Ole Hansen, executive]

It's fair to say that we have several lost projects in Techano. And if you look on Techano, they are competing with major companies with a long track record and history for advanced offshore heave compensated cranes for offshore newbuilds and also offshore retrofits. And of course, what we see is that as a new entrant with somewhat limited track record, we see it takes more time and more hard work with customers to convince them in order to go for a Techano system. That being said, we still have discussions with several clients, whereby they see a value of having a more modern design, a more newer solution combined with Intellilift's automation and steering advantages that they are willing to kind of consider Techano for a new contract award.

[Unknown Executive]

Thank you, Ole. A couple of questions about FiiZK. You have an option to acquire 100% of FiiZK. What will be the determining factors for you to decide whether you will use this call option or not?

[Ole Hansen, executive]

Yes. I think first and foremost, now, it's continue building FiiZK company in terms of executing, delivering on the projects we have just received and of course, signing new contracts for the company. And then as part of the acquisition, we have a call option agreement in order to become the majority shareholder. And I think the evaluation of that will be that we see a successful path to kind of take a larger control and take more responsibility for the company. At the moment, we work together with BEWI as a partner in order to continue to build value in the FiiZK company.

[Unknown Executive]

Thank you. Let's move on to the 2027 ambition that you have announced today, Ole. With your new acquisition targets, do you plan to dilute the margins of the company going forward?

[Ole Hansen, executive]

So I think for our existing businesses, we see still a solid plan to deliver margins, which are good and to what we have been delivering in the past. And as you also have seen both Syncrolift, Intellilift and also Globetech has a very strong track record of delivering good margins. Now also FiiZK are starting to delivering results. And of course, we hope to develop Techano in the same direction. And then for new companies, we plan to own and develop companies with kind of a strong operational foundation. And of course, that means that they should have good margins. And then I will not kind of give specific targets what those acquisition criteria will be. But the plan is to continue to have a solid portfolio of companies delivering good margins and good cash flow every year.

[Unknown Executive]

Thank you. A question about M&A activity. Have you already identified new potential M&A targets to add to your portfolio?

[Ole Hansen, executive]

I think that's kind of a day-to-day continuous job for some of our team members. And we are actively screening, discussing and, of course, both reaching out and being reached out to for such targets. And of course, some of them leads to a closer look and a due diligence whereas some others are kind of not being brought forward. So that's part of daily business.

[Unknown Executive]

A follow-up question on M&A. When you consider M&A, are you mainly looking for profitable companies or are you also looking for typical turnaround cases?

[Ole Hansen, executive]

I think the main target is to look for profitable companies with a significant growth potential. And as such, I would say that Globetech is kind of a good example of a company, which kind of represents what we are looking for, solid operations, a track record of delivering growth with a good margin, but still kind of an untapped potential. Having said that, we are opportunistic if we believe there are certain opportunities that we can get into, which are not in that stage. FiiZK being an example of that. Of course, we need to then be sure that we can handle it and deliver kind of a way to positive figures and financial situation. And of course, we don't have capacity nor the willingness to do several such at the same time. So it's more limited in terms of capacity.

[Unknown Executive]

Another question about M&A. Can you explain if Nekkar is planning to use cash on acquisitions or is it going to be financed with debt?

[Ole Hansen, executive]

I think we both have cash at hand. Of course, we also have treasury shares, which we both utilized in Globetech. And if we need to and we have, we have also debt facilities. And I think growing the company in the future, I think it's possible that we also will pull upon some of the debt facilities we have in order to balance our financial position.

[Unknown Executive]

Thank you. A question about Globetech. Globetech seems to be continuing to develop well since the inclusion. Have you made any changes when it comes to operations/governance, et cetera? Or are they operating more or less as a stand-alone company?

[Ole Hansen, executive]

Yes. I think Globetech continue with kind of the strong team we identified with the founders, which are all still there, and we are kind of building on them and trying to support them in the best manner. That means that we are involved in business planning, strategic discussions and also when there are important recruitments to be made. We have just now hired a Financial Senior Controller for the company together with them, which is kind of a way of strengthening their team. But I think it's first and foremost up to Globetech to kind of run their business, and then we will be a good sponsor and supporter to that journey. And of course, we also see there are synergies. Both Techano and Intellilift are working both with offshore vessels. They also have cybersecurity topics and of course, also connection of equipment and IoT is part of their agenda. So that's a fruitful cluster of minds being brought together.

[Unknown Executive]

We also have -- I think you've touched upon this in one of your previous answers, but we have a couple of questions about margin guidance, either EBITDA or EBIT margin guidance for your '27 targets. I know you probably don't want to answer specifically, but maybe you can address the topic itself, please, Ole?

[Ole Hansen, executive]

Yes. I think if we look upon our companies in our portfolio, Syncrolift is today well established with good margins, and we have then several growth companies. 3 years down the road, we believe that the majority of these companies will all be more in a kind of an established phase, and established phase with a higher revenue, a higher product mix, a higher service share should hopefully lead to also higher margins for those companies. And as I mentioned, like Techano is today in a very early stage and more closer to 0 in margin than closer to something else. So of course, we need to develop that in the coming years. And for the new acquisition prospects we are looking for, we would like to kind of add to the portfolio we have and kind of not completely dilute the margins with kind of very low commoditized businesses, but to invest in companies with an edge and a competitive advantage that enables us to kind of capture a fair share of a margin in a project.

[Unknown Executive]

Thank you, Ole. There is a question here about the mix between organic growth and acquisition to reach the 2027 target. And just to be clear, that mix is already specified on one of the slides in the presentation. But maybe you can add some comments to your ambitions, Ole.

[Ole Hansen, executive]

Yes. I think what we communicate today is that it will be a mix of growth in the companies that we already have, including Globetech and FiiZK with full effect and additional portfolio companies, bringing it up to kind of a portfolio of 6 to 8 companies. And we have kind of illustratively shown this on one of the graphs that there will kind of be both significant organic growth and then also a fair share of M&A, which is needed to kind of get to the NOK 2 billion plus target. And then, of course, this is not a detailed kind of guidance that the mix will be as shown. But illustratively, that's what we are thinking about.

[Unknown Executive]

Question about FiiZK. Are 100% of FiiZK revenue included in the 2027 ambition?

[Ole Hansen, executive]

In the '27 number, we have assumed a 100% FiiZK revenue, correct.

[Unknown Executive]

Thank you. That covers all the questions today. If you do have further questions, feel free to reach out to Nekkar at [e-mail], and we can answer any remaining questions that you may have.

[Ole Hansen, executive]

Thank you.