Vow Asa

Good morning everyone and welcome to this fourth quarter presentation for WOW. I will start with some highlights. Then Cecilia Heckneby will be here today. We'll take you through the numbers. I will come back and give you a market update. before we spend a bit more time than normal on the strategy, as we have completed our strategy work and we'll go through the update with you on that. My name is Gunnar Pedersen. I'm the CEO of the company. So, fourth quarter delivered all-time high revenues. This is driven particularly by strong performance in maritime and also in aftersales. Our operation has improved across the board. with better project deliveries, higher activity levels, and strengthening margins in the key segments. Our industrial solutions is progressing and delivering in line with our expectations, but the results are still impacted by the previously announced non-cash impairment. This reflects updated assumptions also on a more cautious outlook following the strategic review. Our liquidity position has strengthened significantly. The covenants for fourth quarter was waived and the covenants for the first quarter of 2026 have been waived. And also we have come to a new structure for the covenants for Q2 and onwards for 2026. I should mention that in terms of liquidity, we do expect fluctuations resulting from milestone payments and the delivery activities into the projects. Our order intake remains strong with 545 million in the quarter and a backlog of 1.7 billion. There's another 400 million worth of options, which is giving us a very solid visibility going forward. Also, subsequent to this quarter, we have signed a contract for four new cruise vessels valued at 27 million euros. Aftersales continues to grow, supported of course by the expanding installed base and also improved operational performance. Now, Cecilia will take you through the numbers, the detail on the numbers, and I'll be back to talk about the market afterwards.

So good morning. I will give you an update on the financial numbers for the fourth quarter, starting with the key financials for the group. The reporting currency is in the Norwegian kroner. In the fourth quarter, we had high activity and saw an uplift in revenue. Reported revenue for the quarter was 347 million compared to 265 one year earlier, as you can see on the graph on the left-hand side. Positively impacted by all-time high revenue in the maritime solutions and after-sales segments. Revenue from the two circular solution projects developed according to the updated assumptions from Q3. while revenue from heat treatment strengthened the industrial solution segment in the quarter. Moving on to the graph in the middle, we see positive numbers again with adjusted EBITDA for the quarter of 16 million, although negatively impacted by warehouse write-downs of 10 million. The graph on the right-hand side shows the development in the order backlog. At the end of the quarter, the backlog amounted to 1.7 million. It is steadily increasing and gives good visibility. Total revenue in Q4 was 347 million, up 82 million from Q4-24. Revenue in the maritime solutions segment of 171 million is all-time high following progress on large new building contracts and up 53 million from Q4-24. Aftersales has revenue of 64 million in the quarter, which also is all-time high and up 12 million from one year earlier. The 23% increase from Q4-24 is related to high activity and an increasing volume of vessels in operation that gives scale advantages. Revenue in the industrial solution segment is up 16 million from Q4. Last year, revenue development for the two circular solution segment is developing in line with the updated assumptions from Q3, and positive development in tea treatment adds to the segment. The full year numbers for the maritime solution segment are impacted by the catch-up effect in Q2, but still up 25% year-on-year. After sales is up 14% year-on-year, while the industrial solution segment is down 119 million year-over-year, heavily impacted by the updated assumptions for the two circular solution projects that led to the reversal of revenue in Q3. Let's move on. Okay, sorry. So let's move on to the operational key figures for the fourth quarter. Gross profit of 79 million in the quarter is at 3 million from Q4-24. Gross profit in the maritime solution segment is up 11 million, with gross margins up from 19% to 20%. Gross profit in the after-sales segment is up 7 million, with gross margins increasing from 33% to 38%. In the industrial solution segment, gross profit is down 15 million from one year earlier. In Q4-24, the gross margin was 37% compared to 18% this quarter. COGS in the quarter is impacted by breakdowns of inventory in both the maritime solutions and industrial solutions segments in connection with the annual close and detailed review of inventory amounting to 10 million and increased allocation of recovery hours in projects. Recovery hours are up 6 million, following improved time tracking and hourly rate position, as explained in the Q3 presentation, while reported employee expenses are in line with reported numbers one year earlier. Gross employee expenses, including recovery hours adjusted for the non-recurring items, amounted to 79 million in the quarter and is up 7 million from one year earlier. Other operating expenses adjusted for non-recurring items amounted to 25 million, up 3 million from Q4-24. Included in this increase is a 2 million lower government grant in the TIA this year compared to one year earlier. The non-recurring cost of 1 million in the quarter is related to closing of one test facility in France. Adjusted EBITDA in the quarter of 60 million is at the same level as one year earlier, including the non-cash warehouse write-out of 10 million. And I'm pleased to see that the underlying performance is improving. The financial performance in the quarter is heavily impacted by the announced non-cash impairment. All companies must perform an annual impairment test to assess whether assets carrying value exceeds its recoverable amount. We have had a thorough process resulting in recognition of a total impairment of 119 million. In the maritime segment, an impairment of 23 million was recognized related to intangible assets associated with MAP technology, that is Microwave Assisted Paralysis, as this technology has been discontinued and replaced by the new EAP platform, Electrical Assisted Paralysis. In the industrial solution segment, the impairment amounted to 96 million, comprising impairments of intangible assets of 38 million and goodwill of 58 million. The impairments reflect updated assessments of recoverable amounts following revised expectations for future economic benefits across projects and operations, given by changes in underlying market assumptions and updated financial projections. We continue to see significant long-term potential in the industrial solution markets. However, as with early stage and emerging markets, visibility and on the pace of technology adoption remains limited, and we have taken a more cautious approach. Depreciation in the quarter of 12 million is 1 million higher than in Q4-24. Over the last years, the group has invested substantial amounts in terms of acquisition and R&D, and a significant share of projects will commence amortization from 2026. We expect an increase of approximately 4 million in increased amortization during 2026, increasing by another 7 million during 2027. We have now implemented a revised capitalization policy under which only expenditures deemed strictly necessary will be capitalized, supporting a more prudent and disciplined balance sheet approach. Financial items in the quarter of negative 10 million are 6 million lower than in Q4-24. Interest costs from bank loans amounted to 11 million, down 4 million from Q4 last year. There was a foreign exchange loss of 1 million in the quarter. We report in Norwegian kroner, but most of the contracts are in euro, and about 60% of the project costs are in the contract currency as a natural hedge. Fluctuation in foreign exchange rates may, however, have an impact on key financial figures, and we are looking into alternatives to mitigate the risk. Following the sale of VAV shares in VAV Green Metal in June last year, the share of net loss of 3 million and a gain of 1 million is recognized in the full year numbers. Result before tax ended at negative 127 million. Adjusted for the non-cash impairment of 190 million and the non-cash warehouse write-up of 10 million, result before tax is 2.5 million, showing improved operational performance. Sorry, it's a bit difficult to get this one to work. Well, subsequent to the reporting period, we obtained a waiver for the first quarter of 26 and yesterday we agreed on a new covenant structure for the second quarter 26 and the following periods. We have close and constructive dialogue with D&B and I'm particularly pleased that the peak interest that has been added to the loans now is being terminated. So we will, in a short moment, move over to the cash flow. Yes. And looking at the cash flow development, we started 2025 with 229 million in available liquidity following the private placement in December 24. This was reduced to 49 million in available liquidity at the end of Q3. Cash collected in Q3 was used to resolve overdue payables, improving the overall financial position. During the fourth quarter, liquidity improved significantly following large milestone payments and ended 2025 with 136 million in available liquidity. I will continue to closely monitor working capital and we will see fluctuations over the next quarters driven by project execution and timing of milestone invoicing and collections. So this was a walkthrough of the key financial development in the quarter, and now Gunnar will give you a business and strategy update.

Thank you, Cecilia. So I will start by having a look at maritime solutions. Now the cruise market continues to strengthen with improved profitability and high occupancy levels on board the cruise vessels, which also then drives demand for newbies. Forkwater showed both high revenue and high fund solution, given by higher delivery volumes and progress on new building projects. Our order intake is very strong, And backlog provides long visibility, with deliveries now stretching well into the 30s. The shift from legacy contracts to new contracts with more updated terms is improving margins and stability as well. We expect to see continued good performance in 2021.