Company presentation December 2016 Your Aquaculture Technology and - - PowerPoint PPT Presentation

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Company presentation December 2016 Your Aquaculture Technology and - - PowerPoint PPT Presentation

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Company presentation December 2016 Your Aquaculture Technology and Service Partner Important Information About this Company Presentation This Company Presentation has been prepared by AKVA group ASA ("AKVA group" or the

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Your Aquaculture Technology and Service Partner

Company presentation

December 2016

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Your Aquaculture Technology and Service Partner

Important Information About this Company Presentation

This Company Presentation has been prepared by AKVA group ASA ("AKVA group" or the "Company") for information purposes only, and does not constitute investment advice

  • r an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction to any person. Any recipient or reader of this Company Presentation contemplating to make

an investment in the Company must rely on their own examination of the Issuer, including the merits and risks involved. Each recipient and reader of this Company Presentation should consult with its own legal, credit, business or tax adviser as to legal, credit, business and tax advice. By receiving

  • r accessing this Company Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and

that you will conduct your own analysis and are solely responsible for forming your own opinion of the potential future performance of the Company’s business. The information contained in this Company Presentation has not been independently verified. No representation or warranty (express or implied) is made as to the accuracy or completeness of any information contained herein, or any oral information provided in connection therewith, and it should not be relied upon as such. The Company accepts no liability whatsoever arising directly or indirectly from the use of this Company Presentation. This Company Presentation is current as of 12 December 2016. Nothing herein shall create any implication that there has been no change in the affairs of AKVA group since such

  • date. This Company Presentation contains forward-looking statements relating to the Company's business, the Company's prospects and other forward-looking statements.

Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", "expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this Company Presentation, including assumptions, opinions and views of the Company or cited from third party sources, are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development.

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Your Aquaculture Technology and Service Partner

AKVA group highlights

  • Undisputed #1 supplier of technology and services to the

aquaculture sector

  • Salmon farming is driven by high demand, high prices and

increased technological sophistication

  • New salmon farming growth to come from land-based and

more exposed locations with higher technological requirements

  • AKVA group is well positioned for continued growth and

margin improvement – active dividend policy

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Your Aquaculture Technology and Service Partner

Agenda

Company Market & trends Financials 1 2 3

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Your Aquaculture Technology and Service Partner

AKVA group – uniquely positioned for future growth

Cage-based Land-based

  • Plastic

and steel cages Infra- structure Feed systems, sensors and cameras Technology and farming services

  • Land-based

facilities Land-based equipment

1 2 4

Software

3

CAPEX based revenue OPEX based revenue Leading technology solutions and service partner to the global aquaculture industry Global presence - subsidiaries in 8 countries 768 employees Market cap of NOK ~2100m and net debt of NOK 213m

*as of 30.09.2016

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Your Aquaculture Technology and Service Partner

Presence in all main farming regions

Map of activities Revenue per region YTD September 2016

Nordic Americas Export

Nordic 79 % Americas 9 % Export 12 %

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Your Aquaculture Technology and Service Partner

AKVA group serves all salmon farmers in the World

Customer examples Revenue per customer YTD September 2016

Customer 1 Customer 2 Customer 3 Other

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Your Aquaculture Technology and Service Partner

Strategic priority to increase the proportion

  • f software and service-related revenue

Revenue reoccurring vs technology YTD September 2016 Comments

  • Introduction of rental business model in Norway. Already

successfully introduced in UK and Canada

  • Rental is an “all inclusive service” providing for instance light
  • r picture for an agreed period of time (2 to 5 years duration)
  • reduced CAPEX and reducing operational work from the

customer

  • Acquisition of YesMaritime in 2014, a provider of diving, ROV

and other services to the salmon farming sector (Farming services)

  • Development of Farming Services still in an early stage –
  • pportunity for consolidation
  • Aim of delivering more than 30% of revenue through software

and services – by developing software, farming services, technology services and rental further

CAPEX based revenue; 74 % OPEX based revenue; 26%

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Your Aquaculture Technology and Service Partner

Agenda

Company Market & trends Financials 1 2 3

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Your Aquaculture Technology and Service Partner

Aquaculture is becoming increasingly technology-intensive

Source: Salmon farmer annual reports Notes: 1) Based on reported farming capex and harvest volumes for Marine Harvest, Salmar, Cermaq, Lerøy, Grieg, NRS and Bakkafrost, 2015 figures are based on company guidance

Farming capex, NOK/kg harvested 1) Comparison of cage in 1980 to cage in 2014

4,0 1,6 2006 2015 +2.5x

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Your Aquaculture Technology and Service Partner

Driving forces – salmon industry

SHORELINE

The exponential challenge of the coastal zone

  • SALMON LICE
  • CONCENTRATION OF STAKEHOLDER INTEREST
  • WATER QUALITY
  • AVAILABLE SPACE FOR EXPANSION
  • ENVIRONMENTAL IMPACTS OF CONCENTRATED ACTIVITIES

EXPOSED SITES FARMING LAND BASED FARMING

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Your Aquaculture Technology and Service Partner

Industry entering into a stagnant phase – with rapidly increasing costs

  • 200 000

400 000 600 000 800 000 1 000 000 1 200 000 1 400 000

1992 2015 Sales volume

  • M. Tons live weight (WFE)

Production cost (NOK/kg) 5 10 15 20 25 30 35 40 45 50

CAGR 12-15

+0,1 %

Source: Deloitte, Directorate of fisheries

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Your Aquaculture Technology and Service Partner

Industry stagnant phase

Industry phase development effects on technology demand

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Your Aquaculture Technology and Service Partner

Cage farming development

SHELTERED EXPOSED OCEAN FARMING

SHORELINE

INCREMENTAL DEVELOPMENT:

  • ENLARGEMENT AND

INCREASED ROBUSTNESS

INCREMENTAL DEVELOPMENT:

  • BASED ON EXPERIENCES FROM AQUACULTURE

AND OFFSHORE INDUSTRY

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Your Aquaculture Technology and Service Partner

Development of land based and closed containment technologies

SHORELINE

LAND BASED TECHNOLOGY CLOSED CONTAINMENT TECHNOLOGY AT SEA

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Your Aquaculture Technology and Service Partner

ATLANTIS SUBSEA FARMING AS

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  • Established in partnership with the companies Sinkaberg-Hansen AS and

Egersund Net AS – 33.3% of the shares each

  • Purpose of developing submersible fish-farming facilities for salmon on

an industrial scale

  • Has applied for six development licences to enable large-scale

development and testing of the new technology and operational concept

  • Through its innovative development work, ATLANTIS aims both to

contribute to better and more sustainable use of current farming sites as well as to enable use of more exposed sites than is currently possible. The goal is to achieve production gains and improve fish welfare by submerging the facilities, as they will be far less exposed to the environmental and physical conditions than in a surface position

  • Although ATLANTIS represents a significant leap forward in terms of

innovation, it is also an objective for the concept to keep costs at a level that helps strengthen the industry's competitive position. The aim is also that the technology and operating methods developed through ATLANTIS can be made available and adopted by the industry relatively quickly

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Your Aquaculture Technology and Service Partner

The growing global movement to participate in sustainable aquaculture

The progressive regions: Salmon Sea Bass & Sea Bream Other Species – emerging regions

Middle East: Offshore – Saudi , Oman, Iran (Caspian) Lakes/Dams – Iran Land Based – UAE, Saudi, Oman, Iran Sub-Sahara Africa: Offshore – Mauritius, Mozambique Lakes/Dams – Lesotho, Ghana, SE Africa Land Based – SE Africa Asia: Offshore – Indonesia, Malaysia, Japan, South Korea, India, Sri Lanka Lakes/Dams – China, Vietnam Land Based – China, Thailand, Malaysia, Indonesia, Vietnam

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Your Aquaculture Technology and Service Partner Cycle development Time

Continued growth expected – still in early stage of development

Cycle development Oil Aqua Growth drivers

  • The salmon industry is still the frontier.

Analysts expects limited volume growth in salmon farming in 2014-2020. This implies high salmon prices which is the prime driver for growth in the technology and service industry

  • Additional growth from increased

regulation, adding complexity and adding need for compliance

  • Additional growth from other species

and regions

  • Additional growth from maturation of

the industry – the players are getting more specialized

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Your Aquaculture Technology and Service Partner

AKVA group is the undisputed #1 technology and service provider to the aquaculture sector

Cages Aquaculture machinery Water engineering Software & IT Service & Support

  • AKVA group is the

undisputed #1 supplier to the aquaculture industry

  • Complete offering

increasingly seen as positive by customers

  • Scale provides

technological advantage

  • Holds the most well-

known brands in the industry

  • Present in all main

markets Revenue, NOKm

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Your Aquaculture Technology and Service Partner

Agenda

Company Market & trends Financials 1 2 3

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Your Aquaculture Technology and Service Partner

AKVA group has seen operational revenue growth of 87% from 2012 to 2016

Notes: 1) 2012 for software is excluding a one of gain of MNOK 29 related to the sale of the Norwegian Maritech business

AKVA group revenue Comments

803 98 97 724 1 071 1 021 2014 657 132 2013 94 52 2012 1) 919 973 1 425 1 246

  • Growth in cage-based driven both technology sales and

reoccurring revenues

  • Growth in land based due to high activity in the market. The

acquisition of Plastsveis AS in April 2013 and Aquatec Solutions AS in September 2015 also contribute to growth

  • Software with steady organic profitable growth

Cage-based Land-based Software 167 106 2015 222

CAGR +17%

2016 LTM September 338 139 1 499

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Your Aquaculture Technology and Service Partner

Target of 10% near-term EBITDA margin – further potential longer term

Notes: 1) 2012 FY for software is excluding a one of gain of MNOK 29 related to the sale of the Norwegian Maritech business

AKVA group EBITDA-margin across segments Comments

  • Mid-term target of 10% EBITDA margin is achieved
  • Land-based margin continue to increase due to restructuring
  • f business segment and recent acquisitions of new

companies

  • AKVA group margins set to increase with increasing portion of

Software and Services

9%

  • 11%
  • 3%

Cage-based 9% 4% 3% Group 8% 5% 4% Software 14% 20% 15% Land-based 0% 2014 2013 2012 1) 10% 2015 6% 20% 9% 8% 20% 10% 2016 LTM September

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Your Aquaculture Technology and Service Partner

Operational leverage is a driver for increased margins

Notes: 1) 2012 is excluding a one of gain of MNOK 29 related to the sale of the Norwegian Maritech business

AKVA group gross margin and SG&A 1) Comments

  • Relative cost base has improved over the last years
  • Hands on in all operations constantly challenging cost

development in all units

  • The number of FTE’s decreased in 2013 and 2015 due to cost

focus and controlled reduction of exposure in Chile

  • The number of FTE’s has increased in 2014 and 2016 mostly

due to the acquisition new companies

Figures in '000 NOK

2012 2013 2014 2015 2016 LTM September Revenue 802 530 918 670 1 246 059 1 425 338 1 498 582 COGS 587 833 674 770 928 395 1 041 212 1 095 504 Gross margin 214 697 243 900 317 664 384 127 403 078 GM in % 26,8 % 26,5 % 25,5 % 26,9 % 26,9 % OPEX 185 881 196 995 214 299 248 967 255 428 EBITDA 28 816 46 905 103 365 135 159 147 650 EBITDA in % 3,6 % 5,1 % 8,3 % 9,5 % 9,9 % # FTE 650 566 726 670 768 OPEX/Revenue 23,16 % 21,44 % 17,20 % 17,47 % 17,04 %

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Your Aquaculture Technology and Service Partner

Strong financial profile

Equity, Working Capital and ROCE % Comments

  • Constant focus on balance sheet performance in all Group

units

  • Strong balance sheet KPIs
  • Focus on improving ROCE

323 771 325 274 338 856 389 252 428 432 437 788

WC ROCE %

0 % 5 % 10 % 15 % 20 % 25 %

  • 50 000

100 000 150 000 200 000 250 000 300 000 350 000 400 000 450 000 500 000 2011 2012 2013 2014 2015 2016 YTD Equity WC ROCE %

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Your Aquaculture Technology and Service Partner

Strong financial profile

Net debt (MNOK) and net debt/EBITDA Comments

  • Bank debt refinanced in January 2014 with improved terms

and conditions

  • Low financial gearing
  • Financially positioned for further growth, both organically and

through M&As

44 89 82 76 98 136 71 172 213 0,4 0,9 0,8 0,7 0,8 1,0 0,5 1,1 1,4

  • 1,0

2,0 3,0 4,0

  • 2

28 58 88 118 148 178 208 238 268 Q3 - 2014 Q4 - 2014 Q1 - 2015 Q2 - 2015 Q3 - 2015 Q4 - 2015 Q1 - 2016 Q2- 2016 Q3- 2016 Net interest bearing debt NIBD/EBITDA(12months rolling)

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Your Aquaculture Technology and Service Partner

Order backlog is all-time high

AKVA group order backlog Comments

  • All time high order backlog at the end of Q3 2016
  • Increased order backlog over the last years
  • Delivery time of backlog is 1 to 18 months with most of the

delivery in the first six months

  • Increased portion of land based gives a longer duration in the
  • rder backlog
  • Some seasonal pattern of increasing backlog in Q4 and Q1 and

decreasing backlog in Q2 and Q3, however with more land based and service activity we expect less seasonal variations in P&L and order inflow during the year

200 100 600 300 400 500 4Q 3Q 2Q NOKm 1Q 2015 2013 2012 2014 700 2016 800 900

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Your Aquaculture Technology and Service Partner

Current dividend policy in AKVA group ASA

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  • The Company’s main objective is to maximize the return
  • n the investment made by its shareholders through

both increased share prices and dividend payments

  • A dynamic dividend policy was launched in 2014. Based
  • n the financial performance and outlook the company

aims to pay out dividend according to the two step policy twice every year, after the first half and the second half of the year.

  • A two step policy:
  • The dividend level shall reflect the

present and expected future cash generating potential of AKVA

  • group. AKVA group will target a

net interest-bearing debt/equity ratio of less than 0.5x

  • When the target debt vs. equity

level is met, at least 60% of the annual free cash flow after

  • perational and financial

commitments is intended to be distributed as dividend Applicable statutory restrictions shall be observed

Dividend details (in NOK) Year Cash Dividend per share Total cash dividend Payment date 2016 0.75 19 400 000 Q3 2016 2015 1.00 25 800 000 Q4 2015 2014 1.00 25 800 000 Q4 2014 2008 1.00 17 200 000 Q2 2008

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Your Aquaculture Technology and Service Partner

More than 1100 shareholders from 21 countries - 30. September 2016

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Subscribe to Oslo Stock Exchange Releases from AKVA by email on: http://ir.akvagroup.com/investor-relations/subscribe

Share development Origin of shareholders, 5 largest countries 20 largest shareholders

No of shares % Account name Type Citizenship 13 203 105 51,1 % EGERSUND GROUP AS NOR 3 900 000 15,1 % WHEATSHEAF INVESTMENTS LIMITED GBR 969 049 3,8 % VERDIPAPIRFONDET ALFRED BERG GAMBA NOR 554 000 2,1 % SKANDINAVISKA ENSKILDA BANKEN S.A. Nominee LUX 489 417 1,9 % EIKA NORGE NOR 484 470 1,9 % STATOIL PENSJON NOR 350 356 1,4 % VERDIPAPIRFONDET DNB SMB NOR 334 300 1,3 % MP PENSJON PK NOR 317 411 1,2 % VPF NORDEA KAPITAL NOR 300 000 1,2 % MERTOUN CAPITAL AS NOR 238 692 0,9 % OLE MOLAUG EIENDOM AS NOR 230 608 0,9 % VPF NORDEA AVKASTNING NOR 173 550 0,7 % ROGALAND SJØ AS NOR 172 961 0,7 % DAHLE BJØRN NOR 172 094 0,7 % ARCTIC FUNDS PLC BEL 139 535 0,5 % VERDIPAPIRFONDET EIKA ALPHA VPF NOR 125 608 0,5 % STATOIL FORSIKRING A.S NOR 122 595 0,5 % J.P. MORGAN LUXEMBOURG S.A. Nominee GBR 115 354 0,4 % FORTE TRØNDER NOR 114 752 0,4 % MOLAUG OLE NOR 22 507 857 87,1 % 20 largest shareholders 3 326 446 12,4 % Other 25 834 303 100,0 % Total number of shares as per 30.09.2016

No of shares % Origin No of shareholders

20 180 381 78,1 % Norway 1037 4 148 809 16,1 % Great Britain 26 638 537 2,5 % Luxembourg 4 235 519 0,9 % USA 11 217 742 0,8 % Belgia 6 413 315 1,6 % Other 82

Total number of shareholders: 1166 - from 21 different countries 10 000 000 20 000 000 30 000 000 40 000 000 50 000 000 60 000 000 70 000 000 10 20 30 40 50 60 70 80

  • kt. 15
  • nov. 15
  • des. 15
  • jan. 16
  • feb. 16
  • mar. 16
  • apr. 16
  • mai. 16
  • jun. 16
  • jul. 16
  • aug. 16
  • sep. 16

Last 12 months

Trading volume Share price

30 000 000 60 000 000 90 000 000 120 000 000 150 000 000 180 000 000 20 40 60 80 2012 2013 2014 2015 2016

Last 5 years

Trading volume Share price

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Your Aquaculture Technology and Service Partner

AKVA group highlights

  • Undisputed #1 supplier of technology and services to the

aquaculture sector

  • Salmon farming is driven by high demand, high prices and

increased technological sophistication

  • New salmon farming growth to come from land-based and

more exposed locations with higher technological requirements

  • AKVA group is well positioned for continued growth and

margin improvement – active dividend policy