Nekkar Asa

OSE:NKR

Earnings Call Analysis

Nekkar Reports Record Revenue and EBITDA

Nekkar witnessed a record revenue surge by over 43% year-over-year to NOK 179 million in the fourth quarter, with EBITDA more than doubling to NOK 32 million, an 18% margin. The company's cash position improved by approximately NOK 30 million to close to NOK 200 million, and the backlog remained robust at around NOK 800 million. Significant contracts, including a USD 15 million deal in Indonesia, reflect the company's strong market positioning. Syncrolift's service revenue grew 30-35% year-over-year, and with NOK 300 million in order intake over the past year, Nekkar anticipates executing NOK 555 million of its backlog in '24 and '25, suggesting a positive future outlook.

Strategic Expansion and Innovation Drive Growth

Nekkar ASA has made significant strides in expanding their product offerings and securing new contracts. The acquisition of Techano Oceanlift enabled Nekkar to reenter the load handling and lifting segment, with Techano securing a EUR 6.5 million contract to deliver an offshore crane, marking the second such agreement with the same shipbroker and shipyard. Moreover, Techano is innovating with a new series of offshore subsea cranes to meet the demand for electrified subsea operations and construction. While being a newer entity to Nekkar, Techano showed revenue growth and a positive, albeit soft, profit margin in Q4 which is set to improve as customer trust is established.

Impressive Financial Performance and Record Revenues

Nekkar's financial achievements are a testament to their robust growth strategy. The record-breaking quarterly revenue of NOK 179 million represents a 43% increase from the previous year, with a full year revenue of NOK 575 million up by 48%. This is further underscored by their EBITDA margin reaching 18% for Q4 2023, and year-to-date EBITDA rising from 17.5% in 2022 to 18.9% in 2023. Nekkar’s profit soared to NOK 28 million for the period, marking a 152% year-over-year growth, and yielding an annual EPS of NOK 0.78. Backed by an order intake of NOK 242 million in the quarter and a strong backlog of NOK 803 million, Nekkar’s financial future looks promising.

CapEx and Portfolio Companies Show Promise

The company’s strategic investments in R&D and business diversification are noteworthy. CapEx spending decreased to NOK 15 million in 2023, attributed mainly to the development of 3D cranes for the SOV market, supported by NOK 6 million in soft funding. Portfolio companies also reflect healthy financial positions, with Syncrolift generating NOK 515 million in revenue and a 26% EBITDA margin, and Intellilift’s revenues rising by 55% to NOK 34 million, maintaining an 18% EBITDA margin. Newly added Techano Oceanlift delivered NOK 30 million in revenue with a positive EBITDA margin, indicative of potential margin growth as the company matures within the industry.

Navigating Challenges and Setbacks

Despite some challenges, Nekkar has maintained its corporate resilience. For instance, the FiiZK entity faced a negative result of NOK 19 million after tax in Q4, attributed to low activity in some segments and restructuring costs. Nevertheless, there are plans for improvement spread out across 2024 with focus areas like streamlining production and enhancing the Digital team's product offerings, while Closed Systems is preparing to launch an updated closed-cage design.

Future-Focused Initiatives in Renewable Energy

Nekkar envisions growth in the renewable energy sector, championed by their SkyWalker development. The project secured a NOK 75 million grant as part of an industry innovation funding to perform major component replacements on offshore wind turbines. The focus is to execute this project seamlessly, which could open doors for SkyWalker's applicability to similar industry needs, exemplifying Nekkar’s dedication to innovation and sustainability.

Earnings Call Transcript 2023-Q4

[Operator]

Good morning, everyone, and welcome to this fourth quarter presentation for Nekkar. I'm Ole Falk Hansen, the CEO of Nekkar. And today, I will be joined by Marianne, our Head of Finance.

Today's presentation will start with a recap of Nekkar's value proposition. We will present the key highlights from our fourth quarter for the group as well as the unaudited full year results. Furthermore, we will give an update on each of the portfolio companies' developments in the last quarter. And Marianne will take us through the financial highlights. And we will round off as normal with a Q&A after the presentation. Questions may be submitted through the webcast during the presentation. So let's move on.

Nekkar, we are an industrial technology company with focus on efficiency and sustainable solutions for ocean-based industries. We have world-class expertise within industrial software, engineering and complex product execution. And Nekkar are an engaged long-term active owner in our companies. We are focusing on building profitable growth in all our companies. And we have an active agenda, including operational and structural tasks for our holding companies. And finally, we are flexible in terms of ownership and operating model for our companies.

As an introduction, let me give you a short recap of our current business portfolio, which now consists of five entities: Syncrolift, the global leading provider of shipyard solutions for safe and efficient ship docking; Intellilift, industrial software solution focused on automation and remote control system for drilling and offshore load handling; Techano Oceanlift, intelligent load handling systems, such as crane, gangways, both for renewables, subsea and aquaculture vessels; and then we have FiiZK, the leading provider of closed-cage solutions, technical textiles and software for the aquaculture industry; and finally, we have SkyWalker, the disruptive wind turbine service and installation machine for offshore and onshore use.

The Nekkar portfolio is focused on ocean-based industries, as I mentioned. And more specifically, we are targeting these five business segments, as you can see illustrated on the slide. We have Syncrolift towards the shipyard business segment. Techano is both towards renewables, aquaculture and offshore energy. And Intellilift is delivering to all Nekkar companies in addition to having its own focus on the offshore energy segment. FiiZK is a pure aquaculture player. And finally, SkyWalker representing wind turbines, installation and services towards the renewable market.

In terms of the portfolio, the Nekkar entities is spread across the business life cycle, providing a balanced exposure towards generating solid financial results in the short term and providing long-term strategic opportunities for the future. As illustrated below, you will see our portfolio map, from SkyWalker on the left side, in the innovation stage with focus on technology developments with partners as the key focus. And then on the right side, we find Syncrolift, which is the clear and dominant market leader for shiplifts, delivering solid financial results.

So let's move to the fourth quarter results. We have delivered yet a solid quarter. The revenue for the quarter was record high with NOK 179 million, which is an increase of more than 43% compared to the same quarter last year. EBITDA came in at NOK 32 million, equivalent to an 18% margin, which represents more than a doubling from the same quarter last year of NOK 14 million. We are maintaining a strong balance sheet with close to NOK 200 million in cash, which represents close to an increase of NOK 30 million from the third quarter last year.

And we see strong fundamentals going forward. We have a backlog of around NOK 800 million. And furthermore, the order intake in the quarter has been solid with NOK 242 million in order intake. And additionally, we are glad that we so far this year have started the year by securing an additional shiplift contract for Syncrolift for design and engineering and with an equipment package option.

So let's move to some operational highlights. In Syncrolift, we continue to see solid execution of projects. Also, the service revenue has increased more than 30% year-over-year, closing in almost at NOK 100 million. On the sales side, we received an order of USD 15 million for a shiplift contract in Indonesia, which was signed in the fourth quarter. Intellilift are finalizing the full scope of the Transocean Norge rig for Wintershall and are receiving good customer feedback.

And with Techano Oceanlift, we were successfully awarded the second crane contract at the end of December for an offshore vessel with Agalas and the Sefine Shipyard. And our new Techano Oceanlift entity now has two large projects in the project portfolio. For Impact Technology Ventures and SkyWalker, a Nekkar-led consortium was awarded a NOK 75 million grant to develop SkyWalker as an offshore major component replacement tool over the coming years. And I will explain to you some more of this later on.

And finally, for our latest co-investment, FiiZK, we are now moving from restructuring to more business operations. The closed-cage business unit is testing out improved solutions. And we are also glad to share that we have strengthened the team with a new group CEO with strong operational and aquaculture experience. Jan Erik Kvingedal will join the FiiZK team in the coming months.

So let's look a bit more into the financials. As I mentioned, in Q4, we have seen a solid revenue of NOK 179 million, which is an increase of 43% from the last year fourth quarter. Also, the EBITDA of NOK 32 million represents a margin of 18% and more than a doubling from the same quarter last year. And the margin level is also in line with historical averages for the last quarters, as illustrated on this slide.

For the full year of 2023, we ended up with revenues of NOK 575 million, which is a record-high yearly revenue for Nekkar and close to a 50% increase from last year. Also, EBITDA has shown a good development with a 60% growth from 2022 and ended at NOK 109 million, which represents a 19% EBITDA margin for the year. And for comparison, the 2021 results were significantly impacted by substantial project releases related to a significant amount of projects being closed out, so please have that in mind.

In terms of order intake, the fourth quarter was driven by the new contract for Syncrolift as well as the new crane contract for Techano Oceanlift. And the backlog going out of 2023 is solid at about NOK 800 million. And please note that the figure does not include the announced contracts in 2024 for ASMAR.

Okay, let's dive into Syncrolift. On the market and sales side, as I mentioned, we secured the USD 15 million shiplift and transfer system order from PT Pal in Indonesia. And on top of this, we received a contract in Chile earlier on in this quarter, which also includes a USD 24 million option for the equipment package. And as mentioned before, we continue to see high tender activity both within newbuilds and within services.

In terms of financials, we see a 26% revenue growth from the same quarter last year. And service activity has been increasing steadily with 33% year-over-year growth. And also, we are proud that Syncrolift are continuing to deliver stable EBITDA margins with a total of 25% EBITDA margin for 2023.

For operations, we have good progress on all ongoing projects. And we are also glad that the commissioning of the Cochin shiplift in India was finalized in the fourth quarter. As already mentioned, three new contracts are secured recently. And you will find more information about this on the project on this slide, where you see those two projects announced.

So looking back for the last year. Syncrolift has been awarded several major contracts, which emphasized their leading position for safe and efficient shiplift and ship transfer systems around the world. And as you can see, this represents approximately NOK 300 million in order intake for Syncrolift, which has been booked over the last 12 months.

Let's look into some financial figures for services. Our service strategy in Syncrolift continues to pay off in 2023. And service revenue ended at NOK 90 million, which represents a yearly growth in line with the growth we have seen in the last years of between 30% to 35% yearly growth. Service revenue now represents 18% of the total revenue of Syncrolift. And bear in mind that the project business was record high in 2023. And we are proud that we are maintaining the 18% level and also shows our direction towards a target of above 20% service revenue level in Syncrolift.

Going forward, we continue to see a good outlook for the activity level of Syncrolift. Left side shows our backlog and our current expectations in terms of execution year of a total backlog of about NOK 700 million. As you can see, about NOK 555 million of the backlog is to be executed in '24 and '25 while the remaining is to be executed later on.

And on top of a solid backlog, we still see high tendering activity in the newbuild and upgrade segment. And we estimate that tenders with potential worth around NOK 2 billion to NOK 3 billion are to be awarded over the coming 2 years. And we are confident that Syncrolift will continue to maintain a strong global market-leading position in these segments.

So let's move from Syncrolift to Techano Oceanlift, which came into Nekkar from the start of second quarter last year. At the end of December, Techano was awarded a EUR 6.5 million contract to deliver an offshore crane to a newbuild subsea service vessel for Agalas and the Sefine Shipyard. And we are glad that we could receive this second contract for the same shipbroker and the same shipyard. And furthermore, Techano are developing a new series of offshore subsea cranes to meet increased demand for subsea operations and construction, all being electrified.

For the financials, we see significant growth in revenues compared to previous quarters as execution on the first contract is progressing well. The margins in Techano Oceanlift are positive but still soft, which reflects market entry projects required to establish customers' trust in the company's solution. And in terms of operational focus, all eyes on delivering the two projects for Sefine Shipyard, which is already mentioned.

A key purpose of acquiring Techano Oceanlift earlier last year was to reenter the load handling and lifting segment, which Nekkar has extensive experience from. This latest contract and the previous award confirm that this was a good strategic move. And we are delighted with the Techano Oceanlift team and the staff they have had as part of the Nekkar family.

Our crane solutions are highly flexible and developed to fit the requirements of purpose-built vessels such as this one. And tapping into Intellilift's specialized competence to deliver an even more advanced crane solutions underlines the combined strengths of Nekkar Group when it comes to providing safe and cost-efficient lifting and load handing solutions.

Moving on to Intellilift, which is our software and automation provider to all Nekkar entities. Intellilift are pursuing new contracts for automation systems. And Intellilift is our joint venture together with Transocean and Viasat. And we are now preparing a trial for a major oil company in the Gulf of Mexico for the second rig delivered from InteliWell.

Also Intellilift are tendering for simulators and other drilling controls. And of course, there are Nekkar-related contract awards for both Techano crane and Syncrolift projects, which will give activity level and revenues for Intellilift company. In the fourth quarter, the majority of the activity level was related to finalizing the installation on the Transocean Norge rig for Wintershall.

Okay, let's move to SkyWalker, which is part of our Impact Technology Ventures portfolio. Our SkyWalker development started back in 2019 with an onshore focus for newbuild turbine installation. Now the key is on the installed base on bottom fixed turbines in Europe with about 80,000 turbines already installed, where there is a strong need for more efficient maintenance and major component replacements for blades, gearboxes, et cetera. And of course, later on, there are opportunities to bring the SkyWalker concept and the SkyWalker tool to adjacent markets within the wind turbine industry.

We are glad to share that a Nekkar-led consortium was awarded a NOK 75 million grant in December as part of nine industry innovation projects awarded by the Green Platform project in Norway. The scope of the project is to demonstrate SkyWalker in an offshore environment by performing a full-scale major component replacement on an offshore wind turbine. And the focus now for Nekkar is on developing and finalizing partner agreements as well as project financing for the projects for the years to come.

So let's finalize with the last entity, FiiZK. And in Q4, we have focused on completing the restructuring process that were initiated before Nekkar became a shareholder in the FiiZK group. We have successfully secured relevant intellectual property from the former FiiZK entities, which is now integrated into the new FiiZK group. And FiiZK has undergone a significant transformation, segmenting its operations into three dedicated business units being Closed Systems, Technical Textiles and Digital solutions. And each unit operates under its own management structure.

In the fourth quarter, FiiZK delivered revenues of NOK 36 million and a negative result of NOK 19 million after tax. The results are impacted by low activity for some segments and also restructuring-related costs. And we expect '24 to improve gradually throughout the year for the financial results. And finally, we are excited to announce that Jan Erik Kvingedal will join as our new group CEO in a couple of months. With his substantial operational experience in the aquaculture industry, we are confident that Jan Erik is a good recruitment for FiiZK.

So to shed some more lights on the FiiZK group. FiiZK has three valuable market positions within aquaculture. The Technical Textiles business has 80% market share in the Norwegian market for lice skirts scores and close to NOK 100 million in revenues related to lice skirts. For 2024, they are focused on streamlining production, making sure we meet our customers' demand.

FiiZK Digital delivers software as a service solutions for fish farming, production and planning. And 40% of all salmon produced in Norway is supported by our Horizon products. For 2024, the Digital team is working hard to make sure our product offering continues to be the preferred option for the fish farmer.

And finally, we have Closed Systems, where we now also have integrated the Starfish solution, which have delivered 20 systems to fish farmers and completed more than 60 successful production cycles with serialized treatments and impressive biological results, all with leading fish farmers being the operator. And we believe this puts FiiZK in a unique position. And we are optimistic for the year to come as we are about to launch an updated closed-cage design.

So let's move over to the financials, which Marianne will present.

[Marianne Ottosen, executive]

Hi, everyone. I'm Marianne Voreland Ottosen, Head of Finance in Nekkar. And I will give you some more details into our financial performance for the quarter and for the full year.

Let's start with our revenue. As Ole mentioned, we are thrilled to announce a record-high quarterly revenue of NOK 179 million, a substantial increase of 43% compared to the same period last year. Our full year revenue for '23 also reached a record-high NOK 575 million, a strong 48% year-over-year growth. Syncrolift continues to be our primary revenue contributor. But we are very pleased to note increased contribution from Intellilift and Techano Oceanlift both quarterly and annually.

Moving on to profitability. Our EBITDA margin remained healthy at 18% in Q4 2023, a significant improvement from 10.9% in Q4 '22. Q4 '23 margins are consistent with the average margins we have seen over 2 quarters. Year-to-date EBITDA increased from 17.5% in 2022 to 18.9% in 2023.

Net financial items are driven by gain or losses on FX contracts not qualifying for hedge accounting, agio and interest income from our deposits. Additionally, net financial items in Q4 2023 includes Nekkar's share of quarterly net profit in FiiZK of about minus NOK 7 million.

Profit for the period of NOK 28 million compared with NOK 15 million in the same period last year. Annual profit reached NOK 83 million, a year-over-year growth of 152%. These strong profit results give us a fourth quarter EPS of NOK 0.27 and an annual EPS of NOK 0.78.

Regarding sales. As Ole mentioned, the order intake in the quarter was NOK 242 million with a total order intake for 2023 reaching NOK 478 million. Order backlog was NOK 803 million at the end of the fourth quarter, which provides excellent revenue visibility for the coming couple of years, especially also considering subsequent order intake announced in Q1.

And lastly, CapEx. Net capitalized development costs, or R&D, was about NOK 6 million in Q4 '23, up from NOK 1 million last year. Annual CapEx spending was NOK 15 million in 2023, a reduction of NOK 4 million from the NOK 19 million spending in 2022. CapEx in '23 is mainly related to our development of 3D crane and gangway for the SOV market. And it's worth mentioning that Nekkar received NOK 6 million in soft funding in 2023.

Now at year-end, I would also like to highlight some key financial figures for each of our portfolio companies. Syncrolift delivered a solid revenue of NOK 515 million in '23, a year-over-year growth of 34% and a strong EBITDA margin of 26% versus 25% last year. Syncrolift continues to show good project execution together with a continued strong increase in the aftermarket business. Intellilift had revenues of NOK 34 million in 2023, which represents a significant 55% increase from last year. The solid EBITDA margin of 18% is unchanged from last year.

And lastly, Techano Oceanlift, which became a part of the Nekkar Group in the second quarter of 2023. Despite being newly established, Techano delivered revenues of NOK 30 million in '23 with a positive EBITDA margin of 1%. The lower margin reflects Techano's position as a newcomer in an established industry. However, we anticipate seeing improvements in margins over time as we build trust with our customers, increase volumes and introduce more unique product offerings.

And then let's look at our balance sheet, starting with our assets. Nekkar has intangible assets at the end of 2023 of NOK 68 million, which is a decrease of NOK 7 million in 2023. This is primarily due to the Starfish technology being utilized as contribution in kind in the FiiZK transaction. This transaction reduced intangible assets by NOK 25 million, which exceeded the net capitalized development cost for the year. The majority of the NOK 48.9 million of financial assets as of Q4 are linked to our investment in FiiZK. The investment in FiiZK is accounted for according to the equity method.

And then moving on to working capital. As of the end of Q4, we have a working capital of NOK 124 million, which is mainly driven by temporary capital binding in projects in Syncrolift. This is a small increase of NOK 3.3 million since Q3 '23 and an increase of NOK 45.9 million since year-end 2022. The increase is, firstly, driven by higher volumes in general; secondly, higher accrued non-invoiced production, especially from projects approaching key invoicing milestone. Project execution timing will give natural fluctuation in working capital levels from quarter-to-quarter.

Derivatives financial instruments also contributed to the working capital increase this quarter and full year. By the end of '23, our derivative financial instruments or hedging contracts had a market value of NOK 19 million compared to a negative value of NOK 3 million at the end of Q3. The increase is due to the appreciation of the NOK against USD and euro in Q4 2023. Nekkar's total balance sheet amounted to NOK 579 million at the end of '23. We still have no interest-bearing debt and a robust equity of NOK 427 million, representing a solid 74% equity ratio.

Then let's move on to cash flow. Operating cash flow for Q4 '23 is positive at NOK 29.7 million, driven by a solid EBITDA in the period. Cash flow from investment in Q4 is negative at NOK 4.8 million and is primarily related to CapEx. Cash flow from financing amounts to NOK 2.7 million in the fourth quarter, positively impacted by financial income and partly offset by cash spending related to the share buyback program of NOK 4.5 million.

Looking at the entire 2023, the net cash flow ended positive NOK 12.7 million. Factors contributing to this figure includes our strong EBITDA of NOK 109 million, offset by increased working capital of NOK 45.9 million; a cash contribution in FiiZK of NOK 25 million; expenditure in fixed and intangible assets of NOK 19 million; and a share buyback program totaling NOK 11 million. These elements explain why the cash balance hasn't seen a more significant increase in 2023.

In summary, our financial position remains robust. The available cash reserve of NOK 194.1 million, together with the available credit facility of NOK 200 million, assures continued operational stability and strategic flexibility.

Finally, I will give a couple of short comments about our capital allocation strategy. In the current market conditions, Nekkar is seeing several opportunities to grow our business with organic investment into our existing portfolio of companies and M&A for new businesses without -- within our defined segments.

Since we launched our buyback program in late August '23, we have acquired almost 1.4 million shares for Q4 '23 at an average price of NOK 7.91 per share. This equals 1.3% of the total Nekkar shares. Total cash spending related to the program has been NOK 11 million per year-end. And the program is outsourced to Pareto, which takes independent decisions on the execution of the program within the boundaries of the MAR regulations. Ole?

[Ole Hansen, executive]

Thanks, Marianne. So let's soon move to the Q&A. But before that, I will make some conclusion remarks. We have seen a strong revenue and activity level and also EBITDA margins in the fourth quarter. And we maintain a good backlog and a good tender activity, which will create good visibility for all our companies in the coming months and quarter to come. And we believe that the Nekkar portfolio, including our five entities, is well positioned for both the current and the future market environments.

So with this, we will finalize the presentation and move to the Q&A section.

[Marianne Ottosen, executive]

Thank you, [ Andre ]. I would say we are very satisfied. Syncrolift had a very high, record high actually, activity in 2023 with both newbuild and service business having high revenue and strong EBITDA margins. Intellilift delivered a strong revenue increase of 55% in '23. And Techano has delivered NOK 30 million of revenues in '23 in only 3 quarters.

As I mentioned, the margins for Techano is soft. But we are confident that the strategic pricing, the excellent Techano team, combined with introducing more unique product offerings, including Intellilift solutions, will support Techano in the journey of establishing a strong industry position and will lead to increased volume and higher margins over time.

[Ole Hansen, executive]

Yes, there are -- especially the Technical Textiles and the lice skirt business is seasonal. And you could say that Q4 and Q1 are the slowest months and Q2 and Q3 are kind of the highest quarters. And that's due to kind of the seasonality of the farming business. For the other entities, Digital and also closed-cage solutions, it's more of a, yes, normal operation all year around and less seasonality.

In terms of the financial results, as I mentioned, they are now in Q4 impacted by the restructuring that we have more or less completed. And of course, we have started some of these businesses from scratch with 0 customer contracts. And we expect that throughout 2024, we will move from negative to positive numbers in the FiiZK group.

[Marianne Ottosen, executive]

Yes. So we own about 39% of FiiZK. And our investment is accounted for according to the equity method, which means that we account our share of FiiZK net profit in our net finance. And that share will either increase or reduce our investment in FiiZK in our balance sheet.

[Ole Hansen, executive]

Yes. And in Q4, that was NOK 7 million negative, which is part of our net financial items reported.

[Marianne Ottosen, executive]

Yes, yes, we've seen a quite high accrued non-invoiced production and also receivables the last couple of quarters. And that's related to the project business in Syncrolift and the timing of those projects. And for sure, when those projects reach invoicing milestones, we will be able to invoice and then convert that to cash. The specific timing is difficult to say, but it's natural to assume that over the next few months and couple of quarters, we will see that converted to cash. And we also then expect somewhat lower working capital levels in 2024.

[Unknown Executive]

Thank you. Question to you, Ole, regarding Syncrolift. How has your win rate in Syncrolift contracts developed over time?

[Ole Hansen, executive]

Yes. I think we have -- in the second quarter, we presented the win rate figures. And I think, as we mentioned already at that time, you need to look upon this a bit into kind of over a few years because there are fewer projects every year. And of course, 1 year, it may be 100%, another year, it maybe 0%.

With the win rates we have had over the last 12 months, we believe we maintain our kind of leading market position and kind of secures more than half of the contracts which are out there. And we still have the target to attain our market share in terms of newbuild and order intake as we have had over the last decade, which we presented in Q2.

[Unknown Executive]

Thank you. When you sell a new Syncrolift contract, how much value would be attributed to services?

[Ole Hansen, executive]

Yes. Normally, kind of the contracts are separated. So kind of you enter into a newbuild contract and then as the project kind of executes and before it's taken into operations, you at the same time are negotiating and landing a service agreement. So they are kind of separate. And the revenue level is, of course, very dependent on what type of services we are providing and, of course, also what service performance level we are delivering.

And of course, we would like to have more stable, long-term contracts by taking responsibility for part of the scope by having a kind of a yearly fixed revenue and then, of course, invoicing other things as they are now, almost like a service agreement for a car that you're able to buy.

[Unknown Executive]

Thank you, Ole. A follow-up question to this on Syncrolift services. I know you probably won't give a specific figure. But maybe you can give some indications on what is the margins for your service revenues for Syncrolift.

[Ole Hansen, executive]

Yes, I think we are actually -- they are quite in line with the project business. And you can say what's special about the Syncrolift business is kind of the combination of high margins in both projects and services. So with the current service level as we have today and the current project activity level, we are kind of maintaining, I would say, almost an equal margin level in those two businesses.

[Unknown Executive]

Thank you. Question, I guess, that's to you, Ole. Do you have anything to share about what you are going to do with the shares you acquire through the current buyback program?

[Ole Hansen, executive]

Yes, at the moment and kind of what was approved by the general assembly, we have said we keep those for company purposes. And we are continuing to execute the program in accordance with the general assembly decision. And we have the optionality and the flexibility to use that for several company purposes as listed in the assembly decision.

[Unknown Executive]

Thank you. A question to you, Marianne. Could you elaborate on your FX exposure and how you work with hedging?

[Marianne Ottosen, executive]

Yes. As most others that work internationally, we are exposed to currency volatility. At Q3, we did a minor change in our EBITDA definition, and we isolated agio and FX from hedging contracts, not qualifying for hedge accounting in our net finance instead of hitting our EBITDA. So that's one thing.

But of course, we are hedging our projects and our cash flow, which reduced our currency exposure. However, we will still see some currency impacts in our figures. I could also mention that we have quite a lot of natural hedging in our projects as we have both revenue and costs in the same currency, which naturally also reduces the exposure.

[Unknown Executive]

Thank you very much. We have a question about how much current order backlog do you expect to execute in 2024. I guess, Ole, will you provide some figures on what is expected for execution in 2024 and 2025 on Slide #16? But do you want to add some more flavor to it?

[Ole Hansen, executive]

I think we kind of stick to those figures. And bear in mind, those are Syncrolift-related figures only in those NOK 555 million. And of course, execution timing is, of course, impacted by also factors outside of our control. And that's why we will not provide specific guidance on '24 isolated.

[Unknown Executive]

Thank you. Another question, do you, Ole, are going to continue the share repurchase program all the way through 2024?

[Ole Hansen, executive]

Yes. We have a mandate and a decision to continue that until the next general assembly. And the plan is to continue according with that. And of course, as Marianne mentioned, we are kind of operating under the MAR regulation framework. So of course, there are limitations in terms of volume and -- based on trading volumes in terms of how many shares Pareto are allowed to buy within that regulation.

[Unknown Executive]

Another question to you, I think, Ole. Can you say anything about how large the restructuring costs of FiiZK were in Q4?

[Ole Hansen, executive]

I think it's fair to say that kind of Q4 was kind of a mixed bag in terms of results. Because as I mentioned, there were restructuring in terms of both, some downsizing, some one-off costs in terms of starting up again. And also that some of the businesses, especially the closed-cage business, had kind of a start from 0 in a new entity, getting the employees and all the IP and assets into the new entity but still having no customer contracts.

So of course, it's as expected, the development. And we plan to see that development turn from negative to positive throughout this year as both the closed-case business hopefully get contracts as well as the other businesses either gains more momentum or gets into higher seasonality quarters, which will, especially for the Technical Textiles, take place from, yes, Easter and onwards.

[Unknown Executive]

Thank you. A couple of questions about SkyWalker. And I guess, Ole, that's to you. Regarding SkyWalker, I wonder how do you approach the market? Will you operate that -- will you operate the technology, offering it as a service? Or will you sell the technology to wind farm operators or a combination of both?

[Ole Hansen, executive]

Yes. I think that's a very relevant question, which we are all very focused on now. And I think there are many options for SkyWalker in terms of how it's brought to the market. And we are discussing that now together with potential partners in terms of finding a commercial value proposition for going to the market.

And of course, that could be several elements. One could be to offer it as a service, as a tool that we rent or sell. Another one could be to package it together with a vessel and sell kind of a vessel equipped with SkyWalker. And also a third option maybe to equip a vessel with SkyWalker and people in order to kind of operate the full scope of a blade or a gearbox replacement for the operator.

And the customers may differ between these models. It may be the OEMs, the wind turbine manufacturer, which has a warranty period and takes responsibility for several of these repairs. And it also may be the developers, which owns the wind farms through the whole life cycle and, of course, need to perform maintenance and modifications throughout that period. And of course, it could also be vessel owners by equipping it.

So I think we are very focused now on both kind of securing a good consortium and partnership for the Green Platform development projects, which will then build and test SkyWalker offshore, but also having a good go-to-market model when we have finalized the project and are launching it into the market on commercial terms.

[Unknown Executive]

A related follow-up question to that topic on the SkyWalker, Ole. What do you consider the main challenges to be with regards to taking SkyWalker to the market?

[Ole Hansen, executive]

Of course, this is a highly innovative product. But it's based on known technology elements from the offshore oil and gas and lifting industries. So I think kind of we are used to handling these types of loads, waves, current motions, et cetera. But of course, in all developments, there are technology risk, which we need to focus on.

And of course, secondly, we are here going to integrate and kind of lift the machine onto a turbine. And of course, there is an interface with the turbine. And that's also why we are working very closely with the related partners in terms of securing that interface and handshake between SkyWalker and the wind turbine being installed.

But of course, if we look on the market fundamentals and, of course, now several offshore wind farm developers having significant costs either for repairing bottom fixed offshore with limited wind turbine jack-up installation vessels at high cost and also those transporting floating turbines to shore to do repairs, we believe there is a clear market and also an interest of getting new solutions to the market.

[Unknown Executive]

Thank you. Question, you have developed several new products in recent years with great success. Are you developing other new products in a different niche? If yes, can you add some color to it?

[Ole Hansen, executive]

Yes. Let me try to answer a bit generic how we do development. So I think all our portfolio companies are doing product innovations and developments within their kind of space of products. Syncrolift does that, Techano does that, Intellilift, FiiZK, et cetera. And of course, that's part of kind of maintaining and positioning your company within the relevant markets.

And on top of that, we have kind of this Nekkar innovation, Impact Technology Ventures, where we have had two projects, SkyWalker and Starfish. And Starfish is now part of FiiZK, as you know. And then we are left with SkyWalker project. And currently, we have no other large project developments into Impact Technology Ventures. But there are several smaller developments with shorter time to market in all the portfolio companies.

[Unknown Executive]

Thank you. That covers all the questions we have received today. I have been notified that you could -- in the beginning of the Q&A, you couldn't hear my voice and my questions. But I think Marianne and Ole's answers were sufficiently detailed enough for you to understand what the question was relating to. So hopefully, that didn't cause too many problems. If not, you can always contact Nekkar at [e-mail] if you have additional questions.

So with that, Marianne and Ole, it's -- I think we will conclude the presentation, and wish everyone a good day.

[Ole Hansen, executive]

Thank you.

[Marianne Ottosen, executive]

Thank you.