AKVA group ASA (AKVA) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning, and very much welcome to the Q4 presentation of AKVA Group. The agenda for this morning is that I will do the highlights and the outlook. Ronny Meinkøhn, the CFO, will do the financial performance. and then we will have a Q&A session. So I kindly invite you to post any questions you might have during the session. First of all, highlights for the Q4, high market activity. We saw limited impact from the COVID-19 restrictions. Also, as earlier announced, we completed a private placement of NOK 321.7 million back in October. And also, we are now issuing a dividend of NOK 1 per share to be paid later in the quarter. We are making considerable progress on our innovation and digital agenda. And I will make some more details later on. Starting with the high-level numbers for Q4. Revenue came in at NOK 831 million, which is representing a pretty high activity level. And I'm also glad to say that we see a pretty positive momentum on the back of that also into 2022. EBITDA came in at NOK 61 million against NOK 54 million last quarter a year ago. And EBIT NOK 19 million versus NOK 9 million. And there are some specifics for the quarter to be provided, and the CFO will give you an update on that one. The full year numbers, turnover of NOK 3.1 billion pretty much in line with last 2 years. But please bear in mind that we had a very soft start of the year and a strong closing when it comes to the, let's say, the quality of the revenue. EBITDA for the year excluding the cyberattack cost of approx NOK 50 million came in at NOK 302 million versus NOK 338 million a year ago. And the EBIT of NOK 120 million, still excluding the cyberattack cost versus NOK 147 million a year ago. And as we have reported throughout the year, there have been quite some headwinds negatively impacting and affecting our EBIT as such. So I have to make the statement that certainly we're not pleased with this performance. But I am pleased with the commitment and engagement demonstrated by all our employees. We expect 2022 to be more like back to normal and once again, with a very strong momentum into the year. And part of the background for the strong momentum is certainly the very strong salmon price. Our business is a kind of at high level and at trend level, somehow correlated with the salmon price. Demand is higher over time when salmon price is a strong one. So that's something we have seen. And currently, we have a very positive trading environment there, salmon prices really north of NOK 70. People are even starting to talk about NOK 80. So this is fueling the activity level and demand within our sector, the technology sector. And part of the picture is that HORECA, hotel, restaurants catering is coming back again and also that the consensus between analysts is that there will be a very, very low supply growth for 2022 even down to 0% the growth people are talking about. So expectations for a strong salmon price for the year is really there, and that is giving a positive momentum for us as well. Solid order intake for the quarter versus a year ago because there was some seasonality in it, so 15% higher. However, no new land-based contract for the quarter. In that context, I have to say that we have a number of final offers within the post smolt segment in Norway, which we expect to be concluded during the first quarter. The order backlog is still a healthy one at around NOK 3 billion. Sea based is pretty stable. Land based is a strong one, also including AquaCon, which is pending financing. Then spending some time on a more strategic update how we see the trends based on recent development. Starting with the long-term trends, what we -- how we see the salmon world into the year 2030. First, looking in the back mirror, the industry did grow with 1.1 million in the last 10 years, which is representing a CAGR of 6% year-on-year. And one thing is percentages, another thing is tonnages. We believe that conventional salmon production, Sea Based production, will max grow with the same tonnages, around 1.1 million tons. And that is representing a CAGR of 3%. However, if you look at the demand potential, that is more like a 5% CAGR without impacting the salmon price negatively on EUR 6 plus. So -- then what you see between what we think is a realistic supply on conventional versus the demand potential, you see a potential supply gap there on almost 1 million ton. Another way of seeing the same thing is this picture. First of all, the demand expectation on top, the 5% CAGR. And then conventional in the middle and conventional here is excluding offshore, and also certainly Land Based, and there, we believe that 3% is -- 3.2% is in line with the volume increase as such. But the interesting piece is the post smolt. And here, we have an updated -- we have updated our view on what the market is going to look like. And recently, we have been talking about a post smolt of a high scenario like 400-gram and 400-gram -- to get to 400-gram you need to invest roughly 160,000 ton in new smolt capacity. But now we have the view that the post smolt market and the size of post smolt will more grow in direction of 1 kilo over the next 10 years. And then the market behind that is more like 300,000 ton. And why do we believe that? Because we believe that the post smolt concept as such is a very proven one. And over the recent years, we have been seeing the first investments, and now -- also now very recently in the last 1 or 2 years, we have been seeing biological results coming out of those investments. And they are very impressive, generally speaking. One reference here is the customer we have in South of Norway in Rogaland, Tytlandsvik. Tytlandsvik Aqua, they produced 3,000 ton of post smolt last year. That's based on AKVA RAS technology. They produced on average a fish of 750-gram and they had less than 1% mortality and an FCR of 0.80 -- 0.87. And those are compared with the Sea Based, they are very, very impressive numbers. And that's why we believe that proof of concept is really there. The most realistic way to volume growth for Norwegian salmon farmers will be to exercise a post smolt strategy. And that's why we have then upgraded our view on a very strong post smolt market. And we will certainly give this segment much, much higher attention in the coming months and years. And then finally, on the growth. Either that is in North America, Middle East or Asia or in Europe, we believe that the fundamentals are still the same. There is a supply gap to come over the years. So our view on growth is certainly unchanged. We believe that's going to be part of the solution to close the supply gap. This AKVA strategy for Land Based is unchanged, but I can report -- I'm glad to report on some very good and nice progress. The starting point is box #1 here. That's our base technology, our market-leading Zero Water Concept RAS technology. We are still making steps there to further develop and optimize that one. But maybe in particular, in box #2, which is all the kind of surrounding systems like feeding, the fish tanks, the fish handling, the cameras and the lights and the sensors and the control systems. I have to say that we have been kind of under-invested there when it comes to driving the innovation agenda, but we are -- we have really been investing there in the last 12 months. We have built a first-class R&D department with 10 people. So -- and what that has brought to us is a considerable progress when it comes to new feeding, fit-for-purpose feeding systems for growing a big salmon. And the same with the fish handling and also the sensors at [ sea farm. ] So there, we are really making good progress, and we are going to the marketplace in the next few months with new concepts and new solutions. Box #3, we also have a very solid digital team. We have built a lot there during 2021. And the visionary perspective of precision farming and to have -- now I'm talking still about Land Based farming, either post smolt or big fish. The visionary perspective of precision farming and to completely estimate and digitalize the farming of fish in tanks, and that is very much possible. And we are putting a lot of resources into that one. And box #4, also that is well established now. We have 3 PhDs, which are there to bridge between our technology and the practical farming. So they are specialists in fish biology, fish health and also the RAS technology. So they are there to support the pharma in the practical field. So we have been investing a lot, and we are making a good progress there. And that means that we have typically been running our Land Based business on a turnover of between NOK 400 million to NOK 500 million in the last years. We expect to see a pretty solid step up already in 2022 and more to be added on in the next few years. Nordic Aqua Partners is mentioned here. And I can report that, that project is doing fine. It's on schedule. And the [ ikk inlay ] the factory in China will take place in the next few weeks. So that means that they will get into production. So once again, we will focus even more on the base here, which is the current post smolt, we're still keeping a good eye on growing. Sea Based technology. That is really our core business. That's the majority of our business. So also there, we have installed, in place, a very solid innovation program. It's basically based on 4 building blocks. It's about marine infrastructure. And you can see in blue here, different kind of products and value propositions being there. It's about precision feeding to optimize feed conversion and growth. Also here in blue, you see the products and concepts we have in place, and it's about digital to support the farming and operation. And it's also about fish health and lice solution. I will give one more detailed example on the next page here. We have spent quite some time and resources on what we call a deep sea farming concept. And there are considerable benefits, we believe, from bringing the fish below let's say, the sea lice belt or the first 10, 50 meters. So we bring the fish down 15, 20 meters in different concepts we have, you see 3 examples there to the right. And the purpose of the whole thing is to avoid or reduce unwanted surface influences like, for instance, the sea lice, the algae and the currents and during summer could be high temperatures. It provides better fish health and reduced mortality, and also improved fish welfare and reduced the frequency and cost of reactive and lice treatment. Then at the end of my part, I'd like to spend some few minutes to explain about our digital strategy because we have been making a kind of strategic review there over the last 6 months. And we have concluded that we will invest a lot more compared with what we did in the recent years in the space of digital. So this is going to be a vital part of AKVA strategy going forward. So fundamentally, if you look to the left, the future is going to be digital, and radical changes is truly needed to meet supply demand with more sustainable solutions. That's the starting point. And we have built a new team, I'll come back to some more details there. And we are now investing both in the -- for digital, both in the space of Land Based and, of course, also Sea Based. We see 3 megatrends here to the right when it comes to digital for aquaculture. It's about remote operations, precision fish farming and also business ecosystem. And business ecosystem is about unlocking information throughout the entire value chain. So basically, what we have concluded is that and what we have approved by our Board is a 3-year plan to invest ballpark NOK 30 million, NOK 40 million annually to accelerate our digital agenda. And the reason we do that is because we believe this is going to be vital for our business. It's strategic important, but it's also going to provide very attractive returns a little bit into the future. But of course, the investment phase is coming first. Part of this strategy is also to build a top team, a first-class team to drive this development. And that's basically what we have been able to do during 2021. So we are really stepping up there. It comes also, of course, with higher costs but also with higher capabilities. So the capabilities are truly strengthened. A few examples, we have an entire new digital leadership team. We have been able to recruit the top people from within the industry and also some outside the industry. And also product management is significantly strengthened with new hires. Also, bottom here, we also have kind of established some kind of specialized resources. Those are the AI people, artificial intelligence, machine learning people. We did not find them in our area. So we have invested 33.67% of the shares in a London-based AI company. And they are working exclusively for AKVA on the Observe product, which I will explain in a minute. And then I will just flip over the 3 key product areas we have. First is about Fishtalk. Fishtalk is about planning, control and finance. It's a key system for our fish farmers. And I'm also happy to say that of the global salmon production being produced in farms, we have a unique market position there with around 60%. So 60% of the salmon being found in the world is on the Fishtalk system. It consists of 3 models. It's about production planning, biological control and also the financial module. So the recent development we have had there is now cloud enabled as we moved from data silos, which was, of course, considered very old fashioned by our customers to open data exchange, and we have upgraded a number of solutions. And we are doing quite a lot in the coming months and the coming years to improve the solutions. The second one is AKVAconnect, which is basically about enabling precision feeding. It's basically a control and steering system, bringing hardware and software -- hardware and systems together, I should better say, and it's based on open data as well. And AKVAconnect will enable both also, I should say, also remote management for multiple locations. And there, we have just released a new version. And we have very, very recently entered into the first contract on that basis. That's one of the largest salmon pharmacy in Norway. And the contract is based on a license arrangement, providing recurring revenue under our 23 sites behind that contract. And for us, that is representing a breakthrough when it comes to business model. And then finally, about Observe. Observe is aquaculture powered by artificial intelligence. So it's basically a fully automated feeding process utilizing artificial intelligence and machine learning. And it's not a pilot. It's not even a PowerPoint because we have it installed already physically in 30 different sites, in different countries. So it's working. And here, a little bit of a busy slide, but if you look to the left, just a couple of examples and case studies based on Observe the automated feeding. One example from Chile was that when we implemented that automated solution, FCR came down with 10% in our site, from 1.18 FCR, feed conversion rate, to 1.06. And also, in another example, we did see some nice growth increase based on this automated solution. And that brings me to the very end. The core of our strategy and our strategic guidance. First of all, it's about organic top line growth. We are investing in operational excellence and have operational excellence programs in place. And to the right, as already mentioned, quite considerable investments and step up there in innovation spend, both on the product side, the technology side, but also on the digital side. And we maintain our guidance to step up our EBIT 25% year-on-year. And with regards to ROACE to have a minimum of 15% by 2023. So that is very much my part, and I'd like to hand over to Ronny Meinkøhn, our CFO.

Good morning, everyone. I will give an overview of the financial performance to AKVA Group in Q4. And I will start with the consolidated income statement for the quarter and for 2021. The activity level was high in Q4, both with regards to revenue level and market activity. The revenue in the quarter was NOK 74 million higher than Q4 '20 and ended at NOK 831 million. For the full year 2021, the revenue is just about NOK 3.1 billion, a slight decrease compared to 2020. But as Knut stated, we had a really soft start into 2021 and a strong Q4 and a good momentum into 2022. EBITDA and EBIT was NOK 61 million and NOK 19 million in the fourth quarter and the increased profit margin compared to Q4 '20 is mainly related to increased activity level within our Sea Based segment and also reduced quality costs. On the other hand, there are some specifics related to the Q4 and the P&L was impacted by costs related to the transaction we had with this new investor completed in October. And we also see some costs on wrapping up our digital organization compared to Q4 '20. And last, we also experienced some supply chain restrictions and cost inflations in our Sea Based segment, which I will comment in more details later in the presentation. For the full year 2021, the adjusted EBIT is NOK 120 million, which is NOK 27 million below 2020. And please note that the EBIT of NOK 120 million is adjusted for the costs related to the cyberattack of NOK 49.7 million. The higher financial costs in Q4 '21 compared to Q4 '20 is mainly related to unrealized currency loss of NOK 13 million and also reduced share price on our investment in Nordic Aqua Partners of NOK 5 million. And the accumulated losses on the investment in Nordic Aqua Partners is now NOK 2.1 million. So overall, we are, of course, not satisfied with the financial performance in '21. It was a really, really challenging year with severe headwinds and significant negative impact, both from the cyberattack and the COVID-19 restrictions. The book-to-bill ratio of the last 12 months is 135% with an order intake of NOK 4.2 billion and a revenue just north of NOK 3.1 billion. And please note that NOK 1.3 billion of the order intake is related to the AquaCon project that is still subject to financing. High activity during the quarter and 10% increase compared to Q4 '20, a strong increase within our Sea Based segment, but we also see a positive development with increased revenue in both Land Based and digital business segments. Looking at the various markets in which we have operations, the revenue in the Nordic market was close to the same level in Q4 '21 as Q4 '20. The high activity in the Australasia market, that's related to the full grow-out contract with Nordic Aqua Partners in China which shows an increased activity in Q4 compared to previous quarters. And also, as we have seen throughout 2021, we have a strong momentum in the market in Europe and Middle East, with an increase in revenue of 24% quarter-on-quarter. Slight increase in Americas, revenue increased by 2% in Q4 '21 compared to 2020. And please note that this market had a really slow start to 2021, but we saw a gradual increase in both revenue and order intake during the year. And on the segments, the Sea Based business still represents the major part of the revenue with a share of 78% in Q4 '21, the same level as 2020. EBITDA ended at NOK 61 million, a 7.3% in Q4 '21, which is an increase of NOK 7 million compared to 2020, while EBIT was NOK 19 million compared to NOK 9 million in Q4 '20, an increase of NOK 10 million. And as already stated, the increased profit margin in Q4 '21, that's mainly related to increased activity level and reduced quality costs within our Sea Based business segment. However, despite this improvement, we still think that the earnings in the quarter was soft due to costs of NOK 12 million to NOK 15 million related to 3 specifics. And first, we incurred some legal and financial costs related to the transaction with this new investor that came in, in October, Israel Corp. And then, as Knut mentioned, we have invested quite significantly in our digital agenda and capabilities during 2021 including a strong ramp-up of the organization. And of course, this also comes with a cost that have an impact in Q4. Last, we have also experienced some supply chain restrictions and cost inflations in certain products within our Sea Based business, examples includes higher freight rates and also cost increases on important components that we use in our production and product assembly. On short term, these supply chain restrictions, cost inflations, make our operations more expensive and also had somewhat negative impact in the Q4 profit. The financial position in AKVA Group is strong at the end of Q4 with available cash of NOK 603 million. And adjusted for the capital increase back in October of NOK 322 million, the available cash was reduced by NOK 30 million in the quarter. So the reduction is related to ordinary CapEx activities of NOK 21 million, interests of NOK 8 million and also payment of finance lease installments of NOK 20 million. Net working capital is close to the same level as in Q3, ended at 11.6% compared to 12.1%. So we are still not satisfied with the current net working capital levels and still believe that there is room for improvements. The NIBD EBITDA ratio was reduced from 4.1 to 3.1 at the end of Q4, and the reduction is mainly related to the capital increase of NOK 322 million. And please note that EBITDA is adjusted for the costs related to the cyberattack in agreement with our bank. Also, we have just started a refinancing process of our credit facility with Danske Bank and expect this process to be completed by the end of Q1. Since we were faced with quite some headwinds with regards to our profitability during 2021, the return on capital employed remains low and was 5.6% at the end of Q4. But despite this slow development, we still think that a ROACE of a minimum 15% by the end of 2023 is achievable and the target remains unchanged. Dividend. The company has decided to pay NOK 1 per share in accordance with our dividend policy and the payment will be done in Q1. And then some more details on the financial performance in the various business segments and starting with the Sea Based Technology. Overall, revenue and order intake increased by 12% and 15% in Q1 -- in Q4 '21 compared to 2020, while EBITDA came in at 7.6% compared to 6.6% in Q4 '20. And as already stated, that the positive effect we have from increased activity level and reduced quality costs were somewhat offset against -- by supply chain restrictions and cost inflations on certain components and materials. The Nordic region experienced both increased revenue of 4% in the quarter and an increase in order intake of 13%. So in general, the market and tender activity was high in Q4, and this has also continued into 2022. In Americas, the revenues increased by 13% in the quarter, while the order intake was reduced by 31% compared to Q4 '20. But despite this reduction in order intake, we still see a strong momentum in this region, and this is confirmed by the order backlog that is 20% higher at the end of Q4 '21 compared to Q4 '20. And Europe and Middle East, they continue a positive trend with an increase in revenue of 28% quarter-on-quarter. And this is mainly driven by high activity in our company in Turkey and also a very strong increase in order intake of 85%. The main part of our OpEx based on our recurring revenue is related to our service stations in Norway. And as we communicated in Q1 and Q2 this activity was influenced by the COVID-19 restrictions on import on labor. The activity has increased in the second half year and the recurring revenue amounted to NOK 204 million in Q4, a slight reduction compared to Q4 '20. Land Based technology, low order intake in the quarter of NOK 21 million. However, we have now several tenders out in the market, and we expect a conclusion on some of them during Q1. Slight increase in revenue by 2% in the quarter and the full grow-out contract with Nordic Aqua Partners is progressing according to plan with good activity during the quarter. EBITDA of NOK 8.5 million, 5.3% compared to NOK 7.5 million Q4 '20. And please note that the profit margin in this business segment is still impacted by costs related to ramp-up of the organization, both the innovation organization and the project organization as we get prepared to take on a higher activity level going forward. Last, digital. Activity level in Q4 '21 at the same level as in 2020. However, we see a significant reduction in EBITDA margin from the high 38.5% in '20 to 13.1% in '21. The reduced profitability is a direct consequence of the increased investments in our digital organization and capabilities. But we have done a thorough review and these investments are based on a solid business case, and we expect this to have a strong return in the long run. However, in the short-term and also in the medium-term, there will be soft earnings in this business segment until we see a positive shift in activity level. Okay. Thank you for your attention. Knut will now continue with the outlook.

Thank you very much, Ronny. Just concluding the presentation. First of all, salmon price, as I already mentioned, is expected to remain strong, driven by reduced supply, also, the opening of the HORECA segment, at least in Europe. The balance here is that we see some more uncertainty related to supply chain restrictions and some kind of cost inflations in different areas. Certainly, we have a lot of measures in place there in order to manage and mitigate it as much as possible. But in some situations, we saw -- we see more extreme pricing for freight, one example than we have ever seen before. Order backlog is solid and forms a good foundation to execute our organic growth strategy. As already mentioned, long-term fundamentals remains unchanged as presented in our Capital Market Day back in November 2020. The private placement of NOK 321.7 million is accelerating our strategic agenda within all the 3 business segments. And also, I put some emphasis on the digital solution and that's really and truly an important part of AKVA Group's total product offering. And the company will certainly invest a lot here in order to improve our digital solution, both within Sea Based and the Land Based technology. So that brings me very much to the end of the presentation, and we are now ready for the Q&A session. So please post any questions, and our moderator will read the questions.

So good. We have some questions. The first one is from [ Neils Thompson. ] Can you share any biological KPIs on how the generations in Atlantis Subsea have performed versus the Norwegian average of conventional farming?

We have -- I don't have the details in front of me. But generally, that fish group went well. We had lower sea lice than in a kind of, let's say, normal population for that area. So we are closing the project now. And -- but there is quite some, I will call it, spin-off technology from the Atlantis project, and that is what we call Nautilus. Nautilus is a concept, which is also providing a deepwater farming. And our partner, Sinkaberg-Hansen, they have commercially bought a number of Nautilus solutions of us -- from us, sorry, because of the results they did see from Atlantis. So the spin-off technology from Atlantis called Nautilus providing deepwater farming is now a commercially viable product, and we are selling that in the first place to Sinkaberg, just to give some comfort there. Just one more detail on Atlantis since that is now a close project, we have now applied for converting that development license into a permanent license just for information.

Good. So the next question comes from Alex Ognev, how are you positioning yourself for the potential growth in offshore farming?

So -- when it comes to the, let's say, the massive constructions and those large constructions, we don't have that as part of our strategy. But our strategy is to participate via our core products like feeding, nets, if relevant, and also digital solutions. So that's what we are aiming for. But we are not aiming for being a player in the constructions as such. We think that's a specialist business, more suitable for offshore service-related companies. But what is our core is feeding and digital concepts and there we are participating.

Thank you. And then we have some question from Carl-Emil Johannessen. Perhaps we can take the 2 first ones in one. What is the reason for the lower D&A in Cage Based? Should we expect Q4 levels going forward? And how do you expect margins in Land Based to develop in 2022? Are you being conservative in booking revenues in the start-up of the NAP project?

Can we take the first part first?

Yes, I can. What is the reason for the lower D&A in Cage Based, should we expect Q4 levels going forward?

The D&A in Cage Based was lower in '21 compared to previous year. It's 3 effects, I would say. One is that we have not -- if you look into 2019 and '20, we built some new service stations, so it's not comparable with '19 and '20. But also, we decided this year, we are [Technical Difficulty]

Technical hiccup, just a second here.

Okay. I will start over again. The question was why the D&A was lower in Cage Based. And I started my answer by saying that if you look into the numbers in '19 and '20, they were quite influenced by new investments in service stations along the coast in Norway. So we did not have that effect so much in 2021. And on top of that, if you look into the innovation, the costs, we have done some less capitalization of the costs compared to previous years. So we don't see that the Q4 level will increase significantly going forward.

Yes. And then the next question then was, how do you expect margins in Land Based develop in 2022? Are you being conservative in booking revenues in the start up to the NAP project?

I can do the first part and you can answer the NAP part. We will see a gradual uptake in the margins with uptake in the turnover, and we expect a significantly higher turnover in Land Based for 2022 versus 2021. The flip side to the thing is that we are also investing considerable because we really believe in the segment. So we have hired a lot more people during '21 to run our innovation agenda and also strengthen project management, et cetera, contract management. So in order to go to them, let's say, 10% EBIT target, which has been mentioned earlier, I think that you need a turnover in direction of NOK 1 billion. With the current overhead and our investment level, you need to go in that direction in order to get to the 10%. But you will see a good, we hope to see a good step-up in 2022. And then the booking of NAP?

The last question, NAP whether that was conservative? No, no, it's not conservative. If you look at somewhat lower EBIT margin, that's more related to the ramp-up of the organization and the revenue recognition on the NAP project, that's normal, like we do with other projects.

By the book.

By the book. Yes.

Good. Thank you. And then we have 2 more questions from Carl-Emil Johannessen. Do you see activity in Chile picking up with record high salmon prices? Any interest in Land Based project there yet?

In Chile, there is a good activity level on, let's call it, the normal core products we have. We still see more like bigger infrastructure investments, that is still behind. We are speculating the reason for that, but there are more political turmoil in Chile than we have seen in the last years. So that could be one reason. And I don't really know, but the larger infrastructure investments, including post smolt, et cetera, we see that still moving slowly. But on the core products, it's a normal good activity.

And Carl-Emil Johannessen also asks, when will the equity contribution to AquaCon be paid? And what is the status on the fund that will invest in Land Based projects?

We have invested $2.5 million, that's already paid. The same did our new owner, ILCO did the same thing. And then we have some commitments of stepping up to $10 million each, but that's the pending financing of the main round. With regards to this investment we have started to see potential investors there, but it's hard for me to give a guidance on timing on the thing.

Okay. [ Christian Halken ] has some questions. He -- first of all, he asks, you state that order backlog is strong, but close to 50% of its relates to one single project. How confident are you that the project ever gets financed?

Yes. I think the stress test question will be whether it's more likely than not. And since we keep it in our view, we are still underlying that subject to financing. But since we keep it, and we think it's more likely than not.

And when is your market share on your post smolt projects -- what is your market share on your post smolt projects in Norway? When did AKVA last win a post smolt project in Norway?

Now, I don't have a hard market share. We are pretty busy these days with a few projects. It's [ NS ] and it's [indiscernible] which is under execution. And we also are busy with a number of tenders, and we expect those to come to conclusion over the next 1 or 2 months.

Yes. Sorry, the question was when is your market share?

No, I don't have a specific market share.

[ Christian Halken ] also has one final question. We already in 2022, how realistic is the target of reaching ROACE of 15% by end 2023?

And that is still in our planning. So of course, we were punished a lot within the ROACE calculation last year when EBIT is not working like it should. So we expect a good step-up in 2022 and a further step-up in '23 and then based on our own planning, then we will get to the target.

We have 2 questions from [ Mr. Jaiveer Shekhawat ] First of all, well, there are no end -- no end-to-end suppliers to the aquaculture industry globally like you, but I would appreciate if you could highlight a few competitors across each of your key markets that you're keeping a close eye on.

So we see different competition in the different segments. So in the Cage Based, the largest player there is, [ Ståle ] but there are also more specific players within the net business, but [ Ståle ] is a more complete player there. And within RAS or Land Based, you see other players there. The name we see at a number of places is, of course, [indiscernible] but there are also others. So the name and the type of competition is very different from one product segment to another one.

Thank you. And we also have one more question from Mr. Shekhawat. With expected investments in Norwegian Land Based farming facilities over the next decade in the range of NOK 12 billion to NOK 33 billion, as you highlighted. How much of it could be a potential revenue opportunity for you? And could you outline your current and future expansions plan to cater to it?

Okay. The NOK 12 billion to NOK 33 billion was our old view on the market. And behind the max there, if you take that as an example, the NOK 33 billion it was 160,000 ton. Now we have changed our view to 300,000 ton. So the NOK 33 billion becomes then NOK 60 billion as a total CapEx for investing in 300,000 ton of post smolt capacity. What is addressable market for us is ballpark half of that. So that's [ NOK 30 billion ], that is the scope of RAS. So addressable market for us in post smolt in Norway over the next 10 years, we believe is NOK 30 billion. And if you do it quick and dirty and believe it will happen some -- over the years, then the total market is NOK 3 billion a year. And yes, we have a target internally for what market share we are looking for. That's not something we are guiding on, but we are planning and want to have a fair share of that one. And that's also why we have invested quite a lot in order to improve our capabilities, including our offering within that space. And we have much more to offer today rather than just a year ago. So, yes, we believe we are really prepared for playing that market now.

And [ Neils Thompson ] has a final question, what is the lead time for you to transfer price increases driven by inflation to customers in Sea Based?

Yes. We have different type of products here. And typically, if we take things like feeding equipment, cameras, nets, et cetera, et cetera. Typically, we should be able to do back to back. So typically, the lead time is 3 to 6 months. But of course, we do not have mechanism to do an inflation adjustment on the contract. We sell fixed prices on those kind of products. But as a general rule, we are back to back there when we -- when we place the order. But we have seen a few unwanted surprises here because there are some extremes when it comes to technical components, specifics within electronics where all of a sudden prices are spiking. So we are trying to managing that, and we will probably build more stocks in order to be more in control of the situation. But -- and we have also seen some extreme scenarios on freights in a few examples. But generally speaking, we are back to back. On the new Land Based contracts we are making, we typically have some adjustments mechanism there.

Yes. Yes, that's fine. You can see from the net working capital that we have increased the inventory level somewhat lately, that's related to this situation to be -- to secure the supply.

Yes. Thank you. I don't think we have any further questions.

Okay. Then I like to say thank you very much for all the questions, more than normal, and that was very inspirational for us. So thank you very much for your active participation, and have a nice weekend.