Q1 2017 Presentation Oslo May 11 th , 2017 Hallvard Muri, CEO - - PowerPoint PPT Presentation

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Q1 2017 Presentation

Oslo – May 11th, 2017 Hallvard Muri, CEO Simon Nyquist Martinsen, CFO

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Agenda

Highlights Financial performance Outlook 1 2 3 Q&A 4

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Highlights Q1 2017 - by CEO Hallvard Muri

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Continued high market activity

4

• Order intake of 589 MNOK in Q1 2017 (441 MNOK in Q1 2016)
• Record high order intake Q1
• Cage Based segment 435 MNOK in Q1, up 47% YoY
• The high activity in the Nordic region resulted in an order intake
• f 242 MNOK in Q1 2017
• Increased activity in Chile, resulting of an order intake of 80

MNOK in the quarter

• Software segment 51 MNOK, up 16 % YoY
• Land Based segment 103 MNOK in Q1, up 2% YoY. Significant

increase in quoting activity

254 296 252 420 435 63 101 250 57 72 103 33 44 31 32 69 51 328 256 238 214 80 34 2Q15 348

LBT CBT

3Q16 441 533 2Q16 417 1Q17 589

SW

4Q16 561 4Q15 350 1Q16 +34% 3Q15 504 30

MNOK

Order Intake

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Strong quarter on revenue

5

• Operating revenue of 510 MNOK in Q1 2017 (+117 MNOK

from Q1 2016):

• Main increase from Cage Based segment Nordic region,

+79 MNOK compared to Q1 2016

• Positive development in Chile YoY (+23 MNOK), as

positive market sentiment start giving effect

• Increase of 5 MNOK in revenues in the Land Based

segment YoY

402 355 344 393 408 354 449 510 2Q15 3Q15 2Q16 3Q16 1Q16 4Q16 4Q15 +30% 1Q17

MNOK

Revenue

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Positive development in EBITDA margin

6

• EBITDA of 54 MNOK in Q1 2017 (+14 MNOK from Q1 2016):
• Nordic region represents 42 MNOK of the EBITDA in the

quarter

• AKVA group Chile delivers an increase of 2.6 MNOK in

EBITDA YoY

• Positive development in Export, in particular Scotland
• The Land Based segment ends the quarter with an

EBITDA of 6.9 MNOK

41 41 27 40 43 38 24 54 1Q16 4Q15 2Q16 3Q15 2Q15 4Q16 3Q16 +35% 1Q17

MNOK

EBITDA

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High order backlog – good underlying performance

7

First quarter 2017 – Highlights

• Strong sales and order intake
• Order backlog end of March of 1.1 BNOK
• EBITDA of 54 MNOK in the quarter
• Dividend of 0.50 NOK per share paid in March

385 414 385 468 586 647 283 437 417 412 430 357 376 264 286 118 3Q16 2Q16 1Q16 +55% 1Q17 4Q16 822 697 885 998 1 077 494 649 643 4Q15 3Q15 2Q15

MNOK

Order Backlog

Land Based

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Where we deliver

Income distribution Q1 2017 (16) AKVA group’s geographical regions

80% (81%)

10% (10%)

10% (9%) Export Nordic Americas

Nordic Americas Export AKVA group Agents and Distributors

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Strategic priority to increase OPEX based revenue

OPEX based vs CAPEX based revenue Comments

• Focus on increasing OPEX based revenue – by developing software sales,

farming services, technology services and rental sales

• Rental is an “all inclusive” service providing for instance light or picture for

an agreed period of time (2 to 5 years duration) - reducing both CAPEX and

• perational work for the customer
• AKVA Marine Services is growing and competitiveness is strengthening by

introducing own manufactured net washers from Sperre – both in Norway and Chile

• Very good development of the rental business in Scotland in 2016,

continued in 2017

• Software is ready to capitalize on recent and current development of

product modules, by ramping up sales activities

100 99 90 91 101 108 127 119 24,9 % 27,9 % 26,0 % 23,3 % 24,7 % 30,6 % 28,3 % 23,4 %

0,0 % 5,0 % 10,0 % 15,0 % 20,0 % 25,0 % 30,0 % 35,0 % 20 40 60 80 100 120 140 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 OPEX Based revenue % of total revenue

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Revenue by product groups and species

10

• Cage Based technologies = Cages, barges, feed systems and other operational

systems for cage based aquaculture

• S&AS Cage Based = Service and after sales for cage based aquaculture
• Softw are = Software and software systems
• Land Based technologies = Recirculation systems and technologies for land based

aquaculture

• S&AS Land Based = Service and after sales for land based aquaculture

By product groups – Q1 2 0 1 7 By species – Q1 2 0 1 7

• Salm on = Revenue from technology and services sold to production of salmon
• Other species = Revenue from technology and services sold to production of
• ther species than salmon
• Non Seafood = Revenue from technology and services sold to non seafood

customers

Non Seafood 83,8%

(77,4%)

Other species 5,9%

(11,3)

10,3%

(11,3%)

Salmon S&AS Cage Based Land Based Tech 60,1%

(56,7%)

15,3%

(13,7%)

Cage Based Tech 16,5%

(20,3%)

S&AS Land Based 8,0%

(9,3%)

0,1%

(0%)

Software

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Q1 – Operational Highlights

• Expanding and focusing in export markets (Cage Based and Land Based)
• Atlantis – Update on development licenses

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• Developing industrial scale fish farming is top

government priority

‒ Adopting the «salmon model» ‒ Bigger farms ‒ Scale of economy ‒ Better equipment ‒ RAS Land Based juvenile farms

• AKVA group Middle East LLC is about to be established

New office in Iran

Iranian market

AKVA cage farm No. 3 AKVA cage farm No. 2 AKVA cage farm No. 1 AKVA cage farm No. 4 AKVA land based farm No. 2 AKVA land based farm No. 1 Trout Barramundi & Sea Bream

AKVA group Middle East LLC to be established

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Underwater feeding Fish health operations Daily operations (dead fish removal, surveillance, cleaning, etc) Risk management Submerge and raise the cage – safe and remote Air to the salmon Artificial air space

1. Atlantis Subsea Famring AS applied for 6 development licenses the 29th of January 2016 2. The Norwegian Directorate of Fisheries have informed the company that the company’s concept has progressed another step further in the process to get awarded development licenses. 3. The Directorate will go ahead with processing the application limited to 2 licenses, but have rejected the application in terms of the other 4 permits applied for. 4. On May 9th 2017 the company appealed the decision of rejecting the 4 permits.

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Financial performance Q1 2017 – by CFO Simon Nyquist Martinsen

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Q1 2017 - Financial highlights

15

• Strong revenue in the first quarter on the back of a high
• pening order book
• All regions in the Group with increased revenue in the

quarter YoY, largest impact from Cage Based Nordic

• Last twelve months order intake and sales now at 2,100

MNOK and 1,721 MNOK respectively

• Order book continue to grow YoY and compared to year

end

Revenue

MNOK 305 330 301 310 344 355 402 325 449 354 408 393 510 Q2 Q1 Q4 Q3 2017 2015 2014 2016

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Q1 2017 - Financial highlights, continued

16

EBITDA (MNOK)

13 34 24 32 27 41 41 27 24 38 43 40 54 20 40 60 Q2 Q3 Q4 Q1 2016 2014 2017 2015 5 10 15 10,2% 8,2% Q3 Q4 10,4% 10,4% 10,2% Q2 8,0% 5,3% 10,8% Q1 7,9% 4,4% 11,4% 10,6% 10,1%

EBITDA %

• Strong development in the Nordic region, good

contribution from AKVA Marine Services and Sperre

• Last twelve months EBITDA now at 159 MNOK up from 144

MNOK at year end – last twelve months margins at 9,2% up from 9% at year end 2016

• Improved contribution from Land Based – restructuring and

adjustments to cost base in Denmark last year

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Cage Based Technologies

17

Nordic

• Revenue YoY up 38% (24% organic) in total for the region
• All entities contributing positively YoY with our wide range of

products – makes the Group more diversified

• The Farming Services operations is increasing and

strengthening the Group delivering an EBITDA of 4.6 MNOK in the quarter Americas

• Increased activity in Chile – delivering a positive EBITDA of

1.9 MNOK in the quarter

• Our operations in Chile is ramped up to meet the higher

activity level in the market

• Despite slow quarter in terms of revenue in Canada, the
• rder intake was good

Export

• UK ended a very good quarter with a total of 5.4 MNOK in

EBITDA after a strong March

• Turkey has started the year a bit slower than expected,

postponing deliveries into Q2

• Export to emerging markets – with deliveries in Russia and

Iran in Q1 – high quote activity

208 289 31 46 37 50 100 150 200 250 300 350 400 2 4 6 8 10 12 50 11,0% 2016 Q1 276 10,9% 2017 Q1 385

Nordic Americas Export EBITDA %

CBT (Revenue and EBITDA%)

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Land Based Technologies

18

• Aquatec Solutions with a strong start of the year

with an EBITDA of 5.8 MNOK in Q1, an increase of 3.9 MNOK YoY

• Plastsveis is ending the quarter with an EBITDA of

1.1 MNOK

• AKVA group Denmark has a slow start of 2017,

with a negative EBITDA of –0.5 MNOK in Q1

• Sistemas de Recirculation, a subsidiary of Aquatec

Solutions supplying installation work, has a strong start of the year with 1.2 MNOK in EBITDA

79 84 10 20 30 40 50 60 70 80 90 10 2017 Q1 85 8,1% 2016 Q1 80 1 4,7% 1

Nordic Americas EBITDA %

LBT (Revenue and EBITDA%)

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Software

19

• AKVA group Software AS with stable

performance YoY

• Wise experienced lower EBITDA after

pressure on margins and costs

• Ongoing investments in new product

modules expected to strengthen the financial performance of the SW segment further, as sales activities are ramped up 32 37 3 3 5 10 15 20 25 30 35 40 45

• 20
• 10

10 20 2017 Q1 41 1 1 12,0% 2016 Q1 36 16,2%

Nordic Export EBITDA % Americas

SW (Revenue and EBITDA%)

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(MNOK)

2 0 1 7 2 0 1 6 2 0 1 7 2 0 1 6 2 0 1 6 Q1 Q1 YTD YTD Total Order backlog 1 0 7 6 ,7 6 9 7 ,0 1 0 7 6 ,7 6 9 7 ,0 9 9 7 ,7 Order intake 5 8 9 ,0 4 4 0 ,7 5 8 9 ,0 4 4 0 ,7 1 9 5 2 ,0

P&L

OPERATI NG REVENUES 5 1 0 ,0 3 9 2 ,5 5 1 0 ,0 3 9 2 ,5 1 6 0 3 ,1 Operating costs ex depreciations 455,8 352,9 455,8 352,9 1 458,9 EBI TDA 5 4 ,2 3 9 ,6 5 4 ,2 3 9 ,6 1 4 4 ,2 Depreciation and am ortization 19,9 14,6 19,9 14,6 69,2 EBI T 3 4 ,3 2 5 ,0 3 4 ,3 2 5 ,0 7 5 ,0 Net interest expense

• 2,6
• 1,9
• 2,6
• 1,9
• 6,6

Other financial item s

• 3,7
• 7,7
• 3,7
• 7,7
• 19,8

Net financial item s

• 6,3
• 9,5
• 6,3
• 9,5
• 26,4

EBT 2 8 ,0 1 5 ,4 2 8 ,0 1 5 ,4 4 8 ,6 Taxes 8,1 2,8 8,1 2,8 21,0 NET PROFI T 2 0 ,0 12,6 2 0 ,0 1 2 ,6 2 7 ,6 Net profit ( loss) attributable to: Non-controlling interests 0,1 0,9 0,1 0,9 0,1 Equity holders of AKVA group ASA 19,9 11,7 19,9 11,7 27,5

Revenue growt h 29,9 % 20,8 % 29,9 % 20,8 % 12,5 % EBITDA margin 10,6 % 10,1 % 10,6 % 10,1 % 9,0 % EPS (NOK)

0,77 0,45 0,77 0,45 1,06

Financials – Detailed P & L

20

• Increased depreciation mainly due

to increased rental CAPEX and amortization

• Increased due to higher net debt
• 2.9 MNOK relates to investment in

Atlantis Subsea Farming AS

• Minority shareholders (49%) in

Wise Blue AS

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Group financial profile – remains strong

Available cash Average w orking capital

• The graph shows 12 months average

working capital and average working capital relative to last twelve months revenue

• Continued positive relative working capital

development

• Including 50 MNOK of a 90 MNOK credit

facility in Danske Bank, as of Q1 2017

147 157 226 160 230 203 165 256 180 2Q15 3Q15 1Q16 1Q15 4Q16 3Q16 2Q16 1Q17 4Q15 98 85 107 106 123 50 100 150 1 2 3 4 5 6 7 8 9 10 9,6% 7,1% 7,2% 9,3% 9,4% 9,8% 1Q17 3Q15 5,3% 2Q15 134 134 2Q16 1Q16 115 3Q16 5,7% 4Q16 7,7% 4Q15 1Q15 127 118 131 109 64 126 127 145 50 100 150 1 2 3 4 5 6 7 8 9 10 11 9,1% 2Q16 1Q16 6,8% 8,8% 4,3% 3Q16 4Q16 7,5% 8,8% 1Q17 2,2% 4Q15 36 10,8% 2Q15 1Q15 10,6% 3Q15 137

W orking capital

• The graph shows absolute working capital and

working capital relative to last twelve months revenue

• Continued strong capital discipline in the Group
• Expected working capital swing in Q1 after

very low level at Q4 16

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CAPEX

22

Capex (TNOK) and capex / sales (%)

48 591 2 259 6 519

CAPEX breakdown 2017 YTD (TNOK) Ordinary Rental Intangible (R&D)

10 994 16 037 15 871 32 853 23 114 17 067 24 407 24 728 57 368

3% 4% 4% 10% 6% 4% 7% 6% 11%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 10 000 20 000 30 000 40 000 50 000 60 000 70 000 Q1 - 2015 Q2 - 2015 Q3 - 2015 Q4 - 2015 Q1 - 2016 Q2 - 2016 Q3 - 2016 Q4 - 2016 Q1 - 2017

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Net debt/EBITDA of 2.0

23

Change in net debt ( TNOK) Net debt ( MNOK) and net debt/ EBI TDA

310 212 136 71 98 76 2,0 1,4 0,7 0,8 100 200 300 400 0,35 0,70 1,05 1,40 1,75 2,10 82 2Q15 3Q16 0,5 1Q15 0,8 3Q15 1Q17 1,0 4Q15 1,1 1,5 1Q16 172 4Q16 213 2Q16 NIBD NIBD/EBITDA (12 mth rolling)

Net debt 31.12.2016 212 332 EBITDA

• 54 186

Income taxes paid 4 886 Net interest paid 2 553 Capex 57 368 Acquisitions / Divestments

• Paid dividend

12 917 Sale of fixed assets

• Currency effects
• 552

Other changes in working capital 74 738 Net change 97 724 Net debt 31.03.2017 310 056

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Group financial profile – remains strong, continued

24

ROCE Equity

• Dividend of 12.9 MNOK paid in Q1 2017

15,2 17,8% 13,9% 3Q16 3Q15 14,0% 14,7% 4Q15 12,3% 1Q16 1Q15 9,8% 9,6% 2Q16 2Q15 1Q17 4Q16 12,4% 446 435 437 460 435 443 403 428 50 100 150 200 250 300 350 400 450 500 5 10 15 20 25 30 35 40 45 38,9% 38,9% 4Q15 3Q16 31,6% 1Q16 1Q17 2Q16 4Q16 31,3% 37,1% 1Q15 41,5% 2Q15 3Q15 417 38,0% 42,8% 39,6%

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Cash flow statement

25

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW Note 2017 2016 2017 2016 2016

(NOK 1 000)

Q1 Q1 YTD YTD Total Net cash flow from operations 43 049 20 428 43 049 20 428 105 596 Net cash flow from change in w orking capital

• 74 738

65 766

• 74 738

65 766 106 050 Net cash flow from operational activities

• 31 689

86 193

• 31 689

86 193 211 645 Net cash flow from investment activities 1,3

• 22 831
• 29 957
• 22 831
• 29 957
• 260 324

Net cash flow from financial activities 19 761

• 13 288

19 761

• 13 288

105 646 Net change in cash and cash equivalents

• 34 759

42 948

• 34 759

42 948 56 967 Net foreign exchange differences 174

• 1 763

174

• 1 763
• 941

Cash and cash equivalents at the beginning of the period 165 543 109 517 165 543 109 517 109 517 Cash and cash equivalents at the end of the period 130 958 150 702 130 958 150 702 165 543

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Balance sheet

26

BALANCE SHEET 2 0 1 7 2 0 1 6 (MNOK) 3 1 .0 3 3 1 .1 2

ASSETS 1 425 1 376 Intangible non-current assets 573 575 Tangible non-current assets 189 151 Financial non-current assets 3 6 Inventory 204 186 Receivables 327 292 Cash and cash equivalents 131 166 LIABILITIES AND EQUITY 1 425 1 376 Equity 445 435 Minority interest Long-term interest bearing debt 370 348 Short-term interest bearing debt 71 30 Non-interest bearing liabilities 539 563

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Dividend

• The dividend level shall reflect the present and expected

future cash generating potential of AKVA group

• AKVA group ASA aims to pay out dividends twice

a year, after the 1st and the 2nd half of the year

• Dividend in 2016 is allocated as follows:

– 0.75 NOK was paid out per share in 3Q 2016 based on 1st half financials – 0.50 NOK paid out in 1Q 2017 based on the 2nd half financials

1 1 1 0,75 0,5 0,2 0,4 0,6 0,8 1 1,2 2008 2014 2015 2016 YTD March 2017

Cash Dividend

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Largest shareholders

28

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

Share developm ent Origin of shareholders, 5 largest countries 2 0 largest shareholders

10 000 000 20 000 000 30 000 000 40 000 000 50 000 000 60 000 000 70 000 000 20 40 60 80 100 apr.16 mai.16 jun.16 jul.16 aug.16 sep.16

• kt.16

nov.16 des.16 jan.17 feb.17 mar.17

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 80 100 2013 2014 2015 2016 2017

Last 5 years

Trading volume

Share price No of shares % Origin No of shareholders

20 220 206 78,3 % Norway 937 4 223 318 16,3 % Great Britain 23 589 675 2,3 % Luxembourg 5 239 675 0,9 % Belgium 6 199 915 0,8 % Switzerland 7 361 514 1,4 % Other 73

Total number of shareholders: 1051 - from 22 different countries

No of shares % Account name Type Citizenship 13 203 105 51,1 % EGERSUND GROUP AS NOR 3 900 000 15,1 % WHEATSHEAF INVESTMENT GBR 1 051 141 4,1 % VERDIPAPIRFONDET ALFRED BERG NOR 489 417 1,9 % EIKA NORGE NOR 461 396 1,8 % STATOIL PENSJON NOR 412 861 1,6 % VPF NORDEA KAPITAL NOR 381 300 1,5 % MP PENSJON PK NOR 379 238 1,5 % NORRON SICAV - TARGET LUX 314 623 1,2 % VPF NORDEA AVKASTNING NOR 300 000 1,2 % MERTOUN CAPITAL AS NOR 271 649 1,1 % VERDIPAPIRFONDET DNB NOR 238 692 0,9 % OLE MOLAUG EIENDOM AS NOR 193 924 0,8 % ARCTIC FUNDS PLC IRL 191 748 0,7 % FORTE TRØNDER NOR 178 098 0,7 % NORDEA 1 SICAV LUX 176 485 0,7 % VERDIPAPIRFONDET NORDEA NOR 150 000 0,6 % DAHLE BJØRN NOR 145 653 0,6 % ROGALAND SJØ AS NOR 127 000 0,5 % NORRON SICAV - SELECT LUX 120 182 0,5 % STATOIL FORSIKRING AS NOR 22 686 512 87,8 % 20 largest shareholders 3 147 791 12,2 % Other 25 834 303 100,0 % Total number of shares as per 31.03.2017

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Outlook – by CEO Hallvard Muri

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• Leading technology and service partner to the global aquaculture industry
• Global presence and subsidiary in 9 countries
• Deliveries in over 65 countries during the last 40 years
• 842 employees
• 2016 revenues of 1 603 MNOK
• Listed on Oslo Stock Exchange since 2006
• Market cap of ~1 748 MNOK and net debt of 310 MNOK

AKVA group in brief

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Cage Based Technology

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Land Based Technology

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CAPEX Based Revenue

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CAPEX Based Revenue

SOFTWARE

Fishtalk AKVAconnect Support After Sales Service Rentals Marine Services

MARINE SERVICES & AFTER SALES SERVICE

OPEX Based Revenue

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Order backlog and inflow, 2014 through 2017

35

Order backlog Order intake

• Strong order back log, 1,077 MNOK
• 40% of total order backlog relates to Land based technology (LBT)
• The strong market activity continues into Q2
• High market activity and order intake of 589 MNOK

489 287 371 360 185 283 268 321 486 340 332 231 290 103 72 57 250 101 63 80 89 214 12 6 16 36 589 441 Q1 368 243 561 Q4 350 460 417 Q3 504 201 533 Q2 348 327

Other Land Based

414 647 385 357 468 385 586 106 283 430 437 286 417 264 412 346 411 293 376 403 454 93 118 75 93 56 504 649 494 547 Q1 697 1 077 478 998 452 Q2 822 349 643 Q3 885 Q4

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Outlook – AKVA group

36

• Continued good outlook for most markets
• Strengthening the organization and focusing on improving

competitive position across all markets

• Increased focus on supply chain, sourcing and manufacturing

efficiency

• Land Based focus on post smolt segment, high quote bank
• Export, expand business in established and growing clusters
• Continue to evaluate opportunity for new products to fit in core

business

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Q & A

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