AKVA group ASA (AKVA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and very much welcome to the Q4 presentation of AKVA group. The program of this morning -- we have a hiccup here with PC. The program of this morning that I will do the presentation of the overall financials, the strategy. And then -- thank you very much, Ronny. And then Ronny Meinkoehn, the CFO, he will do the financial performance and then followed by a Q&A session. So please do post any questions you might have, if you are in the call during the presentation. Starting with the headlines of Q4. Revenue of NOK 800 million and EBIT of 0 adjusted for NOK 10 million in the cost relating to the restructuring or rightsizing process. Rightsizing process with estimated NOK 45 million in annual cost savings. That is completed in Q4 and will have impact as of Q1 '24. Acceptable order intake in Sea Based, but still slow market in post-smolt Land Based Norway. And AKVA has revised the medium-term financial targets and is aiming for a revenue of minimum NOK 3.6 billion. That's a 5% increase on '23 and an EBIT range of 4% to 5% for 2024. Still, we have a very strong focus to further develop and improve deep farming concepts after the successful commercial breakthrough during 2023. Starting on the quarter, NOK 800 million turnaround, which is at a reasonable level compared with last year. And the sum of the parts is that Sea Based is plus 4%, digital is up 65%, whereby Land Based is a drag with 13% down. EBITDA of NOK 41 million. Sea Based acceptable with NOK 55 million. Digital is temporarily low at NOK 2 million and Land Based is minus NOK 15 million. That's still on the back of low revenue, some high costs, which is stripped out into Q1 and also saw low gross margin in all contracts. For the full year at NOK 3.4 billion turnover, slightly higher than the year before. So it's a reasonable activity level. EBITDA of NOK 263 million. It's some progress versus the turnaround 2022. But latter be no -- let it be very clear that it's certainly very much below the expectation, of course, EBIT of NOK 68 million. Then looking at the order intake and order backlog. Overall, the order intake was NOK 718 million. Sea Based was okay with NOK 679 million, Digital good with NOK 40 million and the Land Based market is still slow. Order backlog is at a fair level, NOK 2.4 billion, NOK 1.4 billion -- NOK 1.54 billion in Land Based and NOK 792 million in Sea Based. Of course, everybody here is well informed of both the market and the development. But just to recap very, very quickly. The consensus on the supply side for the coming years will be for the Atlantic globally, roughly 3%. So that calls for a strong salmon price in the years to come. But there are more things to observe these days than normally. I was recently in Chile. I met with the 6 largest companies there, which is representing 2/3 of the turnover. So I had very good discussions with all the CEOs there. And they are more concerned in Chile these days than usual, in particular, when it comes to Atlantic. So the algae bloom is sitting relatively hard these days. And there is different parts of the biology, which is trend challenging. So more things to talk about with regards to headwind than we like. So I will say, even though the outlook is [indiscernible] on the supply side, it is still in a very challenging environment also in Norway. You are well informed about that. So we still talk about rather high mortality. And a number of quality and production-related issues. So this is a thing to observe in the time to come. Our innovation agenda for Sea Based is the same. We are very consistent. We are deploying NOK 30 million, NOK 40 million every year into that one. And it's about our traditional core products on the left side, which is about the pens, the nets, the net clean, the ROEs and the complete package of what it takes to run our Sea Based farming operation. Precision feeding. I come back to that a little bit, which is very much about automation and digital solutions. And then deep farming, which we have already said that we got a lot of good traction on that during last year. And I just want to explain this concept a little bit more in detail. In the midst, you see that the principal sketch of what we mean in -- with deep farming and what Nautilus is. So basically, you have the plastic cage on the surface. You have wires and wind system and you have the roof typically 30-meter stone. And you have in the center there, you have an air dome. And then you have another 30, 40-meter stone with the traditional cage and net system. So in order to enable Nautilus as an innovation we had 2 important innovations. One is the air dome illustrated to the left, and that's the yellow thing in the middle. So it has a diameter of 8-meter. And actually, we supply oxygen from the surface into the air dome. It's a sort of vacuum there. And the fish by instinct finds its way to the air dome underneath and snap the oxygen, it takes to fill the swimming bladder on a regular basis. And yes, when we started with this some years ago, you could be uncertain whether this thing will cause mortality, whether the fish will find the air dome, but that is working very well. We have seen that now over several generations and actually Sinkaberg-Hansen, they harvested 5 sites based on this principle -- this concept last year. And they did that with very good results, very high superior share. They had the fish in the sea for 16, 17 months because they start to be a normal small size of 150 grams, very low mortality and the economics did work very well. And next to the air dome, the waterborne feeding was the other important invention needed or innovation needed in order to make a concept out of this. And the development we are busy with these days since you are then farming and keep the fish down under for all the months, everything from 8 to 16, 17 months depending on the starting point and the size of the post-smolt. We are now busy with having more digital support to that operation, and that's about Observe, which is automated feeding based on artificial intelligence, and it's also the new kid on the block. That's the camera technology submerged. We just recently acquired last fall. And that's a patent-protected camera technology with self-cleaning lenses, which is fundamental. And Submerged is now authorized by the food safety authorities in Norway in order to do the sea lice counting and also it comes with biomass estimation as well. So in totality, we can deliver everything it takes to run asset merged or deep farming concept. So as already mentioned, we had good traction last year. We sold for ballpark of NOK 350 million in those kind of solutions for this concept. And new customers last year were farmers like SalMar, Leroy and also Somna for 1 trial. So we hope they will have success with this concept, which then will generate more activity for us in the years to come. And we also expect gradually other farmers to test this. Depending on the type of site and the depth and everything, we think anything between 40% to 50% of the Norwegian sites are suitable for this concept, not everybody because you need a certain depth there. But anyway, this is something which is very welcome asset development, but also because of environmental and biological considerations. Digital, we are building a digital powerhouse. We have more than 110 people working within the space of digital, and we have 4 product offerings in combination of our total digital solutions. First, we talk about Observe, where we have 104 sites worldwide based on our recurring revenue model. Observe is about automated feeding based on artificial intelligence and also machine learning. So I had a pleasure a few weeks ago visiting Chile. Chile is the first very big marketplace, which is adopting this -- the digital technology, actually, the appetite for digital technology, we find higher in Chile than in Norway for some reasons. I don't know why. But the Chileans are adopting this very, very fast these days. And one of the larger farmers, they had a complete centralized onshore feeding room with a lot of people working there, all the sites on Observe. And that was very, very interesting visit to see what digital support can do to your feeding. So you can totally automate your feeding based on Observe. Fishtalk has been there for many, many years. That's fundamentally the ERP system for the fish farmer and we have a market share of 60%. Sorry, I forgot to say that Observe, we had a fair commercial traction last year with 64 new sites added. Connect is the steering and control system, bringing hardware and software together. And we changed the business model there 3 years ago, and now we have 353 sites worldwide on our recurring revenue model. And we added 178 sites during last year. Submerged, that's the new kid on the block. That's the camera technology. I already mentioned as part of the deep framing concept. So we just acquired that company, but we have 70 sites on board so far based on this camera technology. So on Land Based, as you have seen, there are -- we are -- we have really -- we have suffered for a few years now with regards to Land Based and profitability. But even in that situation, we have full focus with regards to our innovation and R&D agenda for Land Based. We have a long-term strategy on Land Based. We believe in the segment. And we believe in the uptake of the market, both for post-smolt in Norway over a bit of time and also on growing over some time. So it's core of our strategy, and we are fully focusing on that also when it comes to the innovation agenda. Some specifics with regards to Land Based, starting with post-smolt. I think it's well accepted these days that there is a proof of concept on RAS for post-smolt. AKVA has delivered many, many, many installations around the world, but we have 4 big major projects in Norway, there, we are talking more than 3,000 tonnes of post-smolt capacity, let's say, 1 kilo. And that's to [indiscernible]. And we still want to be very clear. We think that the post smolt -- well-applied post-smolt strategy for our company comes with clear benefits where we talk about significantly reduce time in the sea. That means also less exposure because less months in the sea and improved less sea lice treatments and improved fish health. And also depending on the size of the smolt, it comes also with better capacity utilization of your current sites. With regards to the post-smolt market in Norway, and we are still in a bit, even though there are some exceptions. The main part of the market is still in a wait-and-see mode. They really want to know all the implications from the new resource tax before making final decisions. So making a real decision on investing is taking some time. And even though we are working on multiple prospects and cases, based on how we see it today, we don't expect major post-smolt contracts in the first half of the year, but we hope that the tide will change in the second half of this year. Then down to China, Nordic Aqua Partners. I just -- [Technical Difficulty] finished Q1 during March this year, and that's a project with annual production capacity of 4,000 tonnes. So everything is in line with plan and in time, and things are working very well. They're on the biological side. Of course, NOAP will update on that later when they do their Q4 presentation, but everything is working well there. Phase 2 is initiated, and we have a contract here with an additional 4,000 tonnes, and we have started design and engineering work. But when it comes to big installation, that will only take place through the -- towards the end of this year and during '25. I'm talking about the big installation of the bigger units on site. And then furthermore, we have -- as announced earlier, we have signed another RAS contract, we call it Phase 3, and that's going to be an additional 12,000 tonnes, which is not -- the start of that project is not confirmed by the company. Hence, it is not part of our -- it is not included in our order backlog either. So that's the situation in China, very, very positive development. And then to sum up this, what does it mean for Land Based. We have a total order backlog of approx NOK 1.5 billion. Out of that, more than 2/3 of the order backlog is contracts with mechanism of the nature of being of cost plus. And the reminder, less than 1/3 is then with so-called fixed price, but with a mechanism for cost escalation. So just to recap for '23, we have been signing NOAP Phase 2. As already mentioned, we have been signing Cermaq Finnmark and 2 other contracts. That's what happened in '23 and is part of the order backlog. So based on the aging of the order backlog, the one on -- the approx NOK 1.5 billion, only NOK 600 million will be -- is expected to generate activity in '24 because of the time -- the timing of the 2 biggest projects. So we are guiding an activity level for '24 at minimum NOK 600 million, whereby there will be some clear differences between first half and second half whereby first half will be on the soft side because we are now closing old projects this quarter, and we have a slow start-up of new projects. But overall for the year, activity level of around NOK 600 million. Project margins is expected to improve significantly because we are done with the old contracts, and we have a complete new contract regime with the majority on cost -- nature of cost plus as well. And once again, OpEx level is also adjusted into 2024 as well. And that brings me very much down to some revised medium-term financial targets. First of all, just to recap what I said on the first page, we expect a top line for this year at a minimum NOK 3.6 billion, which is roughly 5% higher than last year. And that's on the back of no growth in Land Based. So it's Sea Based basically and Digital. For '25 and onwards, we expect to see a higher top line growth, more like 10%, Sea Based still continuing at 5%. Why we think Sea Based will pick up at 5% is that we see that the barge business is coming back again. We didn't have any significant barge business in '23. But this year started with a good order intake for barges. So we are rather confident that we will see uptake in Sea Based for '24 and onerous versus '23. Land Based fairly much on the basis of the order backlog we already have, '25 will bring significantly higher activity than '24. So we are guiding a step-up of 30% -- minimum 30% on Land Based. And Digital has been growing -- we have been growing the top line of Digital last few years with 30%, and we expect that to continue. And that will end up in an EBIT guiding or profitability of 4% to 5% EBIT for '24 and '25, a minimum of 6% and also gradually improve the ROACE. So what we have been busy with the last couple of years after the down year 2022 is different operational excellence programs in place, 2x cost reduction program, altogether NOK 150 million approx in savings. And we see that we are able to scale the Digital business and also the Land Based as of '25. And also for Land Based, we have complete new contracts and contract management in place. And this is representing a lot of words. So we just thought it was beneficial to illustrate a little bit what we are doing. And -- so this is, in principle, the same as the previous page, just by illustration here. So you see the revenue, the 5% from '23 to '24 and the 10% from '24 to '25, which we are confident about. And the very -- the down year '22, where we had a lot of issues, cost exposures, old contracts, low margins. It all came together in a very, very bad year. We took a lot of measures, both on the cost side, on the contract side, the way of doing business and operational excellence programs at [indiscernible]. So we see a relative step-up to '23, but still, of course, not on a good level. And then we expect to see another relative step-up for '24 and another one to continue in '25 also on the back of -- on some scaling of Land Based and Digital. And that's how far we go in -- it's just a medium-term update and probably, some quarters later, we will need to provide more long-term outlook again, but this is really for the time being. And that's -- that concludes my presentation. So I hand over to you, Ronny, please.

Thank you, Knut. Good morning, everyone. I will give you some more details regarding the financial performance in the quarter and for 2023. I will start with the group financials and the consolidated income statement. So the revenue in Q4, NOK 800 million is a slight increase of NOK 21 million compared to Q4 '22. While for the full year revenue, we have approximately NOK 3.4 billion, which is a slight increase compared to 2022. EBITDA of NOK 41 million in Q4 is NOK 14 million higher than Q4 '22 the full year EBITDA of NOK 263 million is a step up of NOK 105 million compared to 2022. And we see in Q4, and increased depreciation of NOK 9 million compared to Q4 '22, and this increase is mainly within Sea Based and Digital. So EBIT in the Q4, minus NOK 10 million is NOK 4 million above last year. And adjusted for the NOK 10 million in costs related to the rightsizing process, EBIT was 0 in Q4. Full year EBIT, NOK 68 million, which is an increase of NOK 124 million compared to 2022. But please note that the 2022 EBIT includes restructuring costs of NOK 98 million. So if you adjust for these costs, EBIT in '23 is NOK 26 million higher than in 2022. So we have very high financial costs in Q4 of NOK 43 million, which consists of ordinary items such as interest on debt of NOK 19 million. We have the IFRS 16 interest of NOK 6 million and another NOK 6 million is related to currency losses and other items. And then we have 1 extraordinary financial item in the quarter, which is more on accounting technical matter where we have reclassified NOK 8 million from financial income to the balance sheet. So this is related to a dividend received from a company we own 50% in. We recorded this as a financial income in Q2, but we had to adjust for this now in Q4 and put it into our balance sheet, floating interest. So we decided now early January to swap NOK 500 million of the NOK 900 million into a fixed interest rate for the next 3 years. So based on the current forward rates, we expect a gain on this swap of NOK 5 million in 2024. And we also expect to be a good decision over the next 3 years. We have a strong book-to-bill ratio in 2023 over the last 12 months with an order intake of NOK 3.4 billion -- NOK 4.3 billion, I'm sorry, and revenue of NOK 3.4 billion. And the revenue of NOK 800 million in Q4 is a slight increase of 3% compared to Q4 '22. And compared to last year, we see increased revenue in both Sea Based and Digital in Q4, while we had a 13% reduction in Land Based. Looking at the various markets and segments, we see strong increase in the Nordic market in Q4 compared to Q4 last year of 18%, where we have a decline in revenue in other markets. And Sea Based is still representing the major part, 77% of the total revenue in Q4. While we continue to see a really strong revenue growth in Digital with an increase of 66% quarter-on-quarter. So despite improved profitability compared to Q4 '22, the profitability in Q4 '23 was slow with an EBITDA margin of 5.1%. In Sea Based, we see a margin of 8.8%, which is okay, but not great since we were above 11% level, both in Q2 and Q3. And the reduction we have in Q4 is all related to the product mix. And also, as we have commented several times in previous presentations, the profitability in Land Based is low, partly due to the high cost base compared to the current activity level and also to some extent that part of the revenue is still related to projects with lower profitability. In Digital, we had a temporary setback in fourth quarter on the profitability and Digital delivered only a 1-digit EBITDA margin of 4%. And lastly, this rightsizing process, we announced in Q3 was completed now in Q4 and will give annual cost savings of NOK 45 million with full impact in 2024 and approximately NOK 25 million out of the NOK 45 million is related to the Sea Based business and the remaining NOK 20 million to the Land Based. Available cash decreased by NOK 7 million in the quarter, and we had available cash of NOK 519 million end of Q4 including the available credit facilities we have with DNB. And we are very pleased with the development in net working capital during the quarter. which was reduced from the 8.6% in Q3 to the 6.2% in Q4, which is a solid reduction of NOK 81 million. However, based on the seasonality and also the current product mix, we think it will be hard to stay within the 6% level during Q1 and expect to be closer to the 10% level end of this quarter. The covenant situation has been very tight during 2023, and we decided to have a dialogue with DNB during Q4 and obtained a new waiver for the NIBD/EBITDA covenant. And this new waiver will expire end of Q3 2024 and allows us to adjust the EBITDA by NOK 40 million when calculating this ratio. So including the waiver, the covenant ended at 3.66 compared to the threshold of 4.5. And of course, we are now in a more comfortable headroom with regards to this covenant going forward. Looking at the development in net interest-bearing debt increased by NOK 21 million in Q4. We have this big improvement in net working capital, NOK 81 million. was offset by the CapEx of NOK 35 million. And then we have this new IFRS liability, IFRS 16, the NOK 50 million. And then we have the NOK 35 million related to acquisition of Submerged, the controlling interest, the 51% and also increased ownership in Newfoundland Aqua Service. Full year net interest-bearing debt increased by NOK 121 million. Total CapEx, NOK 35 million in Q4, where NOK 16 million is related to our 3 innovation agendas, one for each of the business areas. And then we have another NOK 6 million related to our new global ERP project. Full year CapEx of NOK 175 million, and the big tickets, we have the innovation part, NOK 72 million, we have the ERP project of NOK 44 million. And last, we have maintenance-related CapEx of NOK 26 million. On dividend, due to the slow financial performance we had during 2023, the company has decided not to pay any dividend for the first half year of '24, and we will make a new assessment for the second half year as a part of the Q2 reporting in August. And then some more details on the financial performance in our 3 business segments, starting with the Sea Based technology, which had an increased revenue of 4% compared to Q4 '23, while the order intake was reduced by 17% in the same period. And with regards to the order intake, we are very pleased with the award of the 2 new barges for the Nordic market, which will be a part of the order intake in Q1. And the EBITDA margin for Sea Based was 8.8%. And as I mentioned, it's improved compared to last year. But still, we had about 11% both in Q2 and Q3. So it's not great, but you should expect some fluctuations because of the product mix in sea-based going forward. So Nordic region, increased revenue of 18%, and this reduction in order intake of 21% in Q4 '23 compared to last year, while in Americas have decreased revenue of 16% and an increase in order intake of 12%. And this higher order intake is related to our business in Chile. Last, Europe, Middle East, same revenue as in Q4 '22. However, we continue to see a reduced order intake. It was reduced by 37% quarter-on-quarter, and this reduction is mainly related to our business in Turkey. So after our peak in Q3, the order intake trend is on a negative trend, while the revenue trend is more a flat liner. So barges are very important to fuel the activity level for this business area. And we have the 2 barges now in January, and we are positive for the coming months, and we believe that we will report a positive trend at the end of Q1. Order backlog of NOK 792 million end of Q4 '23 is NOK 110 million lower than a year ago. We are very pleased with the development in the OpEx-based revenue in Sea Based during 2023. So looking at the fourth quarter, the OpEx-based revenue was 42.5% of the total Sea Based revenue, representing an increase of NOK 31 million quarter-on-quarter. And also for the full year 2023, we reached the milestone by NOK 1 billion in revenue from OpEx-based revenue, which is a pretty good increase of 18% compared to 2022. So for Land Based, we have 0 order intake in the quarter. Revenue decreased by 13% compared to Q4 '22. And as stated by Knut, the activity level will continue to be low, especially during the first half year until the new projects start -- are starting. Also, as I explained during our Q3 presentation, we expected a negative profitability for Land Based in Q4 and the EBITDA was negative of NOK 15 million. So first, we have the high cost base compared to the current activity level. We made measures now in Q4. We adjusted the organization, which will give estimated NOK 20 million in cost savings with full impact in 2024. And secondly, a part of the revenue in Q4 is still related to the projects with lower profit margins. These contracts are old, and I did not have any mechanism for price escalation. So that is also hitting the profitability quite hard in Q4. The 12 months revenue trend is flat for Land Based. The peak in order intake, early '23 is the NOAP contract, the Phase 2 contract, and also the contract with Cermaq Norway, but we don't expect any new significant RAS contracts to be signed during the first half year of '24, but we expect the market to gradually normalize during the second half year. So we have a solid order backlog of NOK 1.5 billion in Land Based compared to last year, it's NOK 0.8 billion higher. But please note, there is a delivery time closer to 3 years on this order backlog. And last is Digital, where we had the significant increase in revenue of 66% in the quarter compared to Q4 '22. However, we had this temporary setback on profitability with a very low EBITDA margin of 4% in the quarter. It's partly related to the cost base, partly to the product mix. We've made measures during the end of Q4, and we expect profitability to be back on higher levels already in Q1 this year. And lastly, the trend of the order intake and revenue is very good for Digital, and it's just confirming the positive development we have been seeing the last 3 years. We have an order backlog of NOK 150 million at the end of Q4 compared to NOK 103 million 1 year ago. So this is exciting going forward, the Digital business. So that was my financial update. I will give it back to you, Knut, for the outlook and the Q&A.

Okay. Thank you, Ronny, So just to sum up that salmon price is expected to remain strong, driven by reduced supply. AKVA expect to see normalization of the post-smolt market in Norway during this year, second half of this year. We have concluded a so-called rightsizing process of the organization. So we will start with a lower cost base into '24 with NOK 4 million to NOK 5 million cost savings. And also, we have revised the medium financial targets, and we are aiming for a revenue of NOK 3.6 million -- a minimum of NOK 3.6 million and our EBIT range of 4% to 5% in '24. And we are certainly continuing to invest in our innovation agenda to improve solutions, both within Sea Based, Digital and Land Based. And that brings me very much to the end. So we are opening up for Q&A. So our moderator has a mic there, so we can distribute the mic with you. I think we start here and then we go to the webcast afterwards. Any questions? Yes, please. Ola?

Ola Trovatn, DNB Markets. First of all, do you have any CapEx guidance for 2024?

Yes, it should be. We are still doing the ERP implementations. So you should expect same level on the ERP for this year and overall, more or less in line with last year, yes.

Yes. And on the Land Based segment, is it fair to assume sort of loss in Q1 and breakeven in Q2 and then improvements thereafter? Or do you expect...

There will be a certain curve this year where we start with lower activity levels. So I think it's fair to say loss-making for Q1 and then a gradual improvement throughout the year, and we should end the year with profit for the last quarter, at least.

Yes. And on the post-smolt market in Norway, can you sort of explain why you think second half will be better than first half? What does it take for farmers to invest in?

Yes, yes. Now we said we have a solid pipeline of prospects. So we are working at least with 4 or 5 qualified projects where we are rather advanced, meaning that they are, in principle, ready for decision-making with their boards. The typical dynamic these days are that the Board decisions are a little bit delayed. So typically, we have December and then it's January and then it's spring. So people are -- and for understandable reasons, people are not easily making final decisions. But since we already have several qualified prospects and processes running, which are not in the initial phase, but at the very final stage, ready for our decision-making, we think the tide will turn. It's a bit hard to qualify the timing of it, to be honest. But at least, we think during first half this year that more certainty will be brought to the table with regards to all the questions related to the resource tax. And when the uncertainty is faded out, which probably will happen throughout the first half, people don't like the situation, but the resource tax will not go away. And when you have taken out the uncertainty, we think on the back of still very good profitability and strong cash flows, we think they will start making decisions again. So that's our assessment.

Yes. And last one for me. Do you see any signs of raw material prices coming down? And do you expect that to pass that along to customers, if that's the case?

So we are, of course, very different from, let's say, a feed company, which has a very big volatility on the raw material part. But of course, we are dependent on raw materials as others. So we think the trend is more downwards than increasing these days. That's what we expect to be the trend generally speaking, you talk plastic, steel or filaments for the net business.

[indiscernible]. One more on the Land Based space. It's still quite lot of players competing in this market. Could you say something about the competitive landscape? And I guess, other players are also struggling with limited activity. Do you see any kind of consolidation or any changes in the competitive landscape?

We also take notice that over the last years, you have seen new players entering, some companies splitting up. So I think it's fair to say there are probably some 8 to 10 players in the space of smolt and post-smolt and ongoing. And I think there are some wishes for consolidation. I do not expect AKVA to take part in that. And the reason is that we have spent a lot of time in order to improve our own technology platform, invested a lot in documentation on what we have there, and I call it science behind. So we think we are in a very good place today with regards to our own technology. And we don't see any appetite from our perspective on the technology side. And then it could only be because of scaling up and size, but if you are 8, 10 players as a starting point, I think that's a tricky consolidation game anyway. So we have an organic strategy for our Land Based activity. That's at least our starting point. So -- we really spent a lot of time in the last 3 years to restructure our business. We are in control of it now every -- on the technology side, on the supply chain. By the way, we have established a very big sourcing office out of China, which we are now using for the purpose of supplying technology and components into the NOAP project, but probably can be used in the future for other projects in the world. So either we are on the technology side, supply chain contract management, management, the sales and everything. We have done so much now, and we are very happy with the capabilities we have, and we want to -- and we have really great possibilities to grow organic. Long answer, but it was an intriguing question.

And just a short follow-up. On the new contracts, are they all now cost plus? Or is it still kind of fixed price contracts that...

The larger contracts are on the nature of cost plus whereby smaller contracts can still be on the basis of a fixed -- so-called fixed price, but always with well-defined clauses for cost escalation which is in big contrast to the past.

So we have 2/3 of the order backlog.

Of the order backlog, more than 2/3 is on the nature of customers. Are there any questions from the webcast?

Yes, we have one. How much revenues from NOAP Stage 1 are recognized in the P&L in 2023?

I guess, must be around 50% of the total contract...

Estimated NOK 200 million, NOK 250 million, yes.

Yes. Roughly 50% of our contract value.

Do we have any more questions here in this room? Well, we don't have any further questions online.

Okay. Thank you very much for your participation. Good to see some people here. So thank you very much.

Thank you.