Q1 2018 Presentation Oslo May 16 th 2018 Hallvard Muri, CEO Simon - - PowerPoint PPT Presentation

Q1 2018 Presentation

Oslo – May 16th 2018 Hallvard Muri, CEO Simon Nyquist Martinsen, CFO

Highlights Financial performance Outlook Q&A

Agenda

Highlights Q1 2018 – by CEO Hallvard Muri

• Overall order intake up 8 % compared to Q1 2017
• Strong quarter for new orders in the Nordic region with

Helgeland Plast and ASA Nordic as the main contributors

• Americas continues the strong development with order intake
• f 187 MNOK in Q1 2018 (up from 117 MNOK in Q1 2017)
• Slow quarter on new orders for the Land Based segment as

some projects have been delayed

• Last twelve months order intake of 2,521 MNOK, compared to

2,471 MNOK in full year 2017

Order intake

Continued growth in order intake

252 328 420 435 427 421 471 543 250 57 72 103 303 92 33 51 69 51 48 53 45 4Q16 31 778 2Q16 1Q17 33 32 3Q16 2Q17 3Q17 4Q17

SW LBT CBT

417 533 561 589 546 1Q18 557 639 +8%

• 16% increase in revenue compared to Q1 2017
• Europe & Middle East more than doubled the

revenue from Q1 2017, with ASA Export and AKVA group Scotland as the main contributors. Several large deliveries to Russia in the quarter

• As for Q4 2017, another strong quarter in Americas

with revenue more than doubled from Q1 2017

• Revenue for the Land Based segment is up 22%

compared to Q1 2017 as we continue to deliver on the order book

High activity across all regions

408 354 449 510 537 484 557 589 3Q17 2Q16 4Q17 1Q17 3Q16 2Q17 4Q16 1Q18 +16%

Revenue

• EBITDA up 10 % compared to Q1 2017
• EBITDA margin of 10.0 %, down from 10.6 % in Q1 2017,

driven by changes in mix/revenue composition

• Europe & Middle East ends a strong quarter with an EBITDA
• f 10 MNOK, up from 6.9 MNOK last year
• Land Based segment ends the quarter with an EBITDA of 9

MNOK compared to 7 MNOK in Q1 2017

• Americas (AKVA group Chile, North America and Australasia)

ends the quarter with an EBITDA of 6 MNOK, more than four times the EBITDA in Q1 2017

Operational leverage taking effect

43 38 24 54 65 61 60 59 3Q17 2Q16 1Q17 4Q16 3Q16 2Q17 4Q17 1Q18 +10%

EBITDA

• First quarter 2018 – Highlights

– Strong platform for further positive development – Order backlog end of March of 1.43 BNOK – EBITDA of 59 MNOK in the quarter – Dividend of 0.75 NOK paid out in March 2018

Eleventh quarter in a row with growth in order backlog

385 468 586 647 698 751 844 951 437 417 412 430 620 629 537 479 1Q17 4Q17 2Q16 3Q16 3Q17 2Q17 4Q16 1 318 1 077 998 1Q18 822 886 1 380 1 381 1 430 +33% Land Based

Order backlog

Operational leverage and profitable growth

27 40 54 59 2015 2016 2017 2018 +119%

EBITDA

325 393 510 589 2018 2015 2016 2017 +81%

Revenue

0,44 0,45 0,77 0,94 2017 2015 2016 2018 +114%

EPS

Q1 Q1 Q1

Income distribution Q1 2018 AKVA group’s geographical regions

Where do we deliver

Nordic Americas Export AKVA group Agents and Distributors

62%(81%) 20%(12%) 18%(7%)

Nordic Americas EME

• The Marine Service business in Chile has started with plans to

grow this segment going forward

• Continued good development for the rental business in Scotland

in 2018

• Marketing and sales activity slowly starting to yield effect for

Software segment

• MNOK 11 (9%) increase in revenue compared to Q1 2017

Development in OPEX based revenue

101 108 127 119 146 140 145 130 5 10 15 20 25 30 35 50 100 150 3Q16 24,7% 30,6% 2Q17 2Q16 1Q17 28,3% 4Q16 23,4% 27,1% 29,0% 3Q17 26,1% 4Q17 1Q18 22,1% % of total revenue OPEX Based revenue

Revenue by product group and species

By product groups – Q1 2018 By species – Q1 2018

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

313 263 367 427 456 401 471 503 39 51 44 52 54 46 54 52 57 40 38 37 2Q16 4Q16 Salmon 408 Non seafood Other species 34 354 449 589 3Q16 1Q17 2Q17 3Q17 4Q17 1Q18 510 537 484 557 30 28 32 212 170 244 307 279 260 287 351 68 75 87 78 104 102 99 82 95 76 77 84 112 83 124 108 1 1 1 1 40 41 41 38 46 47 4Q17 1Q18 Software LBT S&AS LBT CBT S&AS CBT 354 3Q16 449 510 537 484 2Q16 589 33 1 557 4Q16 1Q17 408 2Q17 3Q17 32

• Development in Americas and Chile is still very positive
• Positive improvements in Russian market into 2018
• Pipeline of post smolt projects still strong in Norway and other markets, but decisions are slow
• Increased focus on the Mediterranean markets for Bass and Seabream is starting to yield results
• Good activity in Marine Service segment, although Q1 is a slower quarter
• Completed upgrade of manufacturing lines at Helgeland Plast, and are investing in Marine

Services (vessels)

• Atlantis: Granted one license, starting to plan for execution of project
• Group strategy process – see next slide

Q1 – Operational Highlights

Group Strategy

Focused growth and expansion

Increased international focus Land based post smolt Expand services and OPEX based business Product portfolio add-ons

Operational excellence

Improvement programs within sourcing, logistics and manufacturing Streamline project execution and service delivery Optimize cost base

Technology enabling a sustainable and efficient industry

Production optimization, digitalization and automation Environmentally friendly, safe and quality solutions Exposed farming

Flexible and efficient

• rganization

“One group” Global delivery models Reduce organizational complexity Leadership and competence

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 Farming 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. 5. On June 16th 2017 the Directorate forwarded the appeal to the Norwegian Ministry of Trade, Industry and Fisheries, for their final decision. 6. On December 18th 2017 The Ministry rejected the appeal. The decision is final and cannot be appealed. 7. On February 22nd 2018, The Directorate announced that the Company has been granted one license.

Financial performance Q1 2018 – by CFO Simon Nyquist Martinsen

• 16% growth, a new quarter with strong contributions

from Americas, Land Based and Europe & Middle East

• Last twelve months order intake and revenue now at

2,521 MNOK and 2,167 MNOK respectively

• The order book has grown to 1,430 MNOK at the end
• f Q1 2018, which is 353 MNOK higher than at the end
• f Q1 2017

Revenue

Q1 2018 – Financial highlights

325 402 355 344 393 408 354 449 510 537 484 557 589 Q3 Q2 Q1 Q4 2015 2017 2018 2016

• Sperre is a strong contributor to EBITDA with a total of 8

MNOK in the quarter

• The entities in the Americas region had another strong

quarter with an EBITDA of 6 MNOK, more than four times the EBITDA in Q1 2017

• The margins in the Land Based segment improved

compared to Q1 17, with an EBITDA margin of 8,5%

• Software had a good quarter with an EBITDA of 10.5

MNOK, compared to 4.9 MNOK in Q1 2017

EBITDA (MNOK)

Q1 2018 – Financial highlights

27 41 41 27 40 43 38 24 54 65 61 60 59 20 40 60 80 Q3 Q4 Q1 Q2 2015 2016 2017 2018 5 10 15 Q1 10,0% 10,2% Q2 Q3 10,6% Q4 8,2% 10,1% 12,1% 10,4% 12,6% 11,4% 10,8% 7,9% 5,3% 10,8%

EBITDA %

Nordic

• Sperre is ending the quarter with an EBITDA of 8.2 MNOK, compared

to 4.4 MNOK in Q1 2017

• ASA Nordic on same level as in 2017 in terms of EBITDA
• Lower activity and implementation of new manufacturing lines in

Helgeland Plast as well as different regional mix affected EBITDA

• AKVA Marine slightly below expectation due to weather conditions

in Norway

Americas

• Strong quarter for Chile with an EBITDA of 4 MNOK compared to 1.9

MNOK last year

• The operation in North America and Australasia is ending the

quarter with an EBITDA of 2.3 MNOK, compared to

• 0.6 MNOK last year

EME

• Continued very good order book for the region
• Turkey, Greece, Spain and Middle East has started to win business

and good positioned as these markets develops

• Major orders won in Qatar in the quarter. Export to “emerging

markets“ had a strong Q1 with an EBITDA of 3.6 MNOK

Cage Based Technologies

289 227 46 103 104 2 4 6 8 10 12 14 50 100 150 200 250 300 350 400 450 434 385 11,0% 2017 Q1 9,1% 2018 Q1 50

Americas EBITDA % EME Nordic

Revenue and EBITDA %

• Low order intake in the quarter as

decisions have been postponed

• Several good project opportunities both in

Norway, Scotland and Chile for Q2/Q3

• Revenue increases as projects in the order

book are starting to be delivered

• Margins are improving compared to Q1

2017

• Order backlog of 479 MNOK by the end of

Q1

Land Based Technologies

81 103 6 2 4 6 8 10 20 30 40 50 60 70 80 90 100 110 8,5% 8,1% 2017 Q1 4 109 85 2018 Q1

EBITDA % Americas Nordic

Revenue and EBITDA %

• AKVA group Software ends the quarter

with an EBITDA of 3.5 MNOK compared to 2.9 MNOK in Q1 2017

• Wise Ehf ends the quarter with an

EBITDA of 5.8 MNOK compared to 1.9 MNOK in the same quarter in 2017

• A sale of small business in Wise ehf gave

a gain of 1.9 MNOK

• We are currently carrying out a strategic

evaluation of Wise Ehf in order to realize the potential of the business going forward, no conclusions made yet

Software

37 42 3 5

• 20
• 10

10 20 30 5 10 15 20 25 30 35 40 45 50 55 60 2017 Q1 1 12,0% 1 41 22,2% 2018 Q1 47

EBITDA % EME Americas Nordic

Revenue and EBITDA %

(MNOK)

2 0 1 8 2 0 1 7 2 0 1 8 2 0 1 7 2 0 1 7 Q1 Q1 YTD YTD Total Order backlog 1 4 3 0 1 0 7 7 1 4 3 0 1 0 7 7 1 3 8 1 Order intake 6 3 9 5 8 9 6 3 9 5 8 9 2 4 7 1

P&L

OPERATI NG REVENUES 5 8 9 5 1 0 5 8 9 5 1 0 2 0 8 8 Operating costs ex depreciations 530 456 530 456 1 848 EBI TDA 5 9 5 4 5 9 5 4 2 4 0 Depreciation and am ortization 22 20 22 20 83 EBI T 3 7 3 4 3 7 3 4 1 5 7 Net interest expense

• 3
• 3
• 3
• 3
• 11

Other financial item s

• 4
• 4
• 4
• 4
• 10

Net financial item s

• 7
• 6
• 7
• 6
• 22

EBT 3 0 2 8 3 0 2 8 1 3 6 Taxes 6 8 6 8 36 NET PROFI T 2 4 20 2 4 2 0 1 0 0 Net profit ( loss) attributable to: Non-controlling interests

• 0,0

0,1

• 0,0

0,1 0,1 Equity holders of AKVA group ASA 24 20 24 20 100

Revenue growt h 15,6 % 29,9 % 15,6 % 29,9 % 30,2 % EBITDA margin 10,0 % 10,6 % 10,0 % 10,6 % 11,5 % EPS (NOK)

0,94 0,77 0,94 0,77 3,86

Financials – Detailed P&L

• Of which Land Based is 479 MNOK
• Increased depreciation mainly due to

increased rental CAPEX, investments in AKVA Marine Services and amortization

• 0.6 MNOK relates to investment in

Atlantis Subsea Farming AS and 1 MNOK in investment in associated company

• Minority shareholders (49%) in Wise

Blue AS

Group financial profile – remains strong

230 203 165 256 180 197 206 420 462

2Q16 4Q17 1Q16 2Q17 4Q16 3Q16 1Q17 3Q17 1Q18

Available cash

• Including 83 MNOK of a 200 MNOK credit

facility in Danske Bank, as of Q1 2018 and a 200 MNOK revolving credit facility

• Refinancing of long term loans, increased

credit facility and established a revolving credit was finalized in October 2017

W orking capital Average w orking capital

64 109 124 122 175 127 1 2 3 4 5 6 7 8 9 20 40 60 80 100 120 140 160 180 8,8% 118 1Q18 4,3% 2,2% 1Q16 2Q16 7,5% 3Q16 1Q17 4Q16 6,8% 6,7% 2Q17 36 4Q17 6,2% 3Q17 8,4% 5,8% 131

• The graph shows absolute working capital and

working capital relative to last twelve months revenue

115 106 107 102 100 135 137 1 2 3 4 5 6 7 8 50 100 150 5,3% 7,7% 1Q17 1Q16 7,1% 2Q16 7,2% 3Q16 4Q16 5,7% 5,5% 2Q17 5,0% 3Q17 6,5% 4Q17 6,3% 1Q18 85 98

• The graph shows 12 months average

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

CAPEX

5 10 15 10 000 20 000 30 000 40 000 50 000 60 000 70 000 80 000 90 000 1Q 2016 (TNOK) 19 495 4,2% 1Q 2018 6,9% 5,9% 23 114 17 067 5,9% 2Q 2016 24 407 3Q 2016 5,5% 24 728 4Q 2016 11,2% 4,3% 78 936 4,0% 57 368 1Q 2017 31 666 2Q 2017 4Q 2017 3Q 2017 14,2% 25 517 CAPEX/Sales % CAPEX Intangible 6 152 18 529 Rental Ordinary 837

CAPEX breakdown 2018 CAPEX and CAPEX/Sales %

*Ordinary includes investment in new facilities in Helgeland Plast

Net interest bearing debt/EBITDA of 1.3

Net interest bearing debt ( MNOK) and net debt/ EBI TDA

71 212 310 298 279 356 309 1,4 2,0 1,4 1,5 1,3 0,35 0,70 1,05 1,40 1,75 2,10 100 200 300 400 1,1 1Q16 0,5 213 2Q16 3Q16 1,5 4Q16 1Q17 1,6 2Q17 3Q17 4Q17 172 1Q18 NIBD/EBITDA (12 mth rolling) NIBD Change in net interest bearing debt ( TNOK)

Net interest bearing debt 31.12.2017 356 080 EBITDA

• 59 172

Income taxes paid 5 497 Net interest paid 2 926 Capex 25 517 Acquisitions / Divestments 1 983 Long-term financial assets

• 957

Paid dividend 19 355 Buyback own shares

• Sale of fixed assets
• 2 728

Currency effects 6 416 Other changes in working capital

• 45 546

Net change

• 46 709

Net interest bearing debt 31.03.2018 309 371

Group financial profile – remains strong, continued

Equity and Equity / Total Balance NI BD / Equity

435 460 437 473 476 500 491 10 20 30 40 300 320 340 360 380 400 420 440 460 480 500 520 1Q18 38,9% 38,9% 1Q16 31,4% 2Q16 37,1% 3Q16 31,6% 4Q16 31,3% 435 28,0% 1Q17 29,4% 2Q17 3Q17 30,1% 4Q17 446 0,16 0,37 0,49 0,49 0,70 0,63 0,58 0,71 0,63 0,0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 1Q16 3Q17 1Q17 2Q16 4Q16 3Q16 2Q17 4Q17 1Q18

Group financial profile – remains strong, continued

ROCE ROACE

2Q16 3Q16 12,4% 17,8% 1Q16 14,0% 15,4% 9,8% 11,1% 4Q16 9,6% 1Q17 4Q17 2Q17 13,4% 16,5% 1Q18 3Q17 13,2% 18,6% 1Q16 3Q16 15,1% 4Q16 2Q16 3Q17 1Q17 11,4% 10,9% 12,7% 2Q17 14,6% 16,5% 4Q17 1Q18 17,0%

Cash flow statement

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW 2018 2017 2018 2017 2017

(NOK 1 000)

Q1 Q1 YTD YTD Total Net cash flow from operations 46 664 43 049 46 664 43 049 195 535 Net cash flow from change in w orking capital 45 546

• 74 738

45 546

• 74 738
• 122 851

Net cash flow from operational activities 92 211

• 31 689

92 211

• 31 689

72 684 Net cash flow from investment activities

• 23 306
• 22 831
• 23 306
• 22 831
• 102 672

Net cash flow from financial activities

• 56 013

19 761

• 56 013

19 761

• 22 346

Net change in cash and cash equivalents 12 892

• 34 759

12 892

• 34 759
• 52 334

Net foreign exchange differences

• 2 841

174

• 2 841

174 3 759 Cash and cash equivalents at the beginning of the period 116 969 165 543 116 969 165 543 165 543 Cash and cash equivalents at the end of the period 127 020 130 958 127 020 130 958 116 969

Balance sheet

BALANCE SHEET 2 0 1 8 2 0 1 7 2 0 1 7 (MNOK) 3 1 .0 3 3 1 .0 3 3 1 .1 2

ASSETS 1 755 1 425 1 663 Intangible non-current assets 589 573 596 Tangible non-current assets 251 189 246 Financial non-current assets 7 3 7 Inventory 247 204 238 Receivables 534 327 459 Cash and cash equivalents 127 131 117 LIABILITIES AND EQUITY 1 755 1 425 1 663 Equity 491 445 500 Minority interest 1 1 Long-term interest bearing debt 346 370 351 Short-term interest bearing debt 91 71 122 Non-interest bearing liabilities 827 539 689

Largest shareholders

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

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No of shares % Account name Type Citizenship 13 203 105 51,1 % EGERSUND GROUP AS NOR 3 900 000 15,1 % WHEATSHEAF INVESTMENT GBR 1 199 372 4,6 % VERDIPAPIRFONDET ALF NOR 525 414 2,0 % VPF NORDEA KAPITAL NOR 470 246 1,8 % EIKA NORGE NOR 432 232 1,7 % STATOIL PENSJON NOR 422 623 1,6 % VPF NORDEA AVKASTNING NOR 381 300 1,5 % MP PENSJON PK NOR 301 188 1,2 % NORDEA 1 SICAV LUX 300 000 1,2 % NORDEA NORDIC SMALL FIN 274 300 1,1 % METZLER EURO SMALL + IRL 268 315 1,0 % VERDIPAPIRFONDET NOR NOR 202 611 0,8 % MERTOUN CAPITAL AS NOR 201 756 0,8 % SIX SIS AG Nominee CHE 187 729 0,7 % VERDIPAPIRFONDET DNB NOR 150 000 0,6 % DAHLE BJØRN NOR 146 500 0,6 % FORTE TRØNDER NOR 145 653 0,6 % ROGALAND SJØ AS NOR 124 016 0,5 % OLE MOLAUG EIENDOM AS NOR 107 871 0,4 % VERDIPAPIRFONDET EIK NOR 22 944 231 88,8 % 20 largest shareholders 2 890 072 11,2 % Other 25 834 303 100,0 % Total number of shares as per 31.03.2018

No of shares % Origin No of shareholders

20 066 404 77,7 % Norway 1015 3 940 461 15,3 % Great Britain 19 452 085 1,7 % Luxembourg 5 380 526 1,5 % Finland 6 343 352 1,3 % Ireland 4 651 475 2,5 % Other 110

Total number of shareholders: 1 159 - from 27 different countries 10 000 000 20 000 000 30 000 000 40 000 000 50 000 000 20 40 60 80 100 apr.17 mai.17 jun.17 jul.17 aug.17 sep.17

• kt.17

nov.17 des.17 jan.18 feb.18 mar.18

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 2014 2015 2016 2017 2018

Last 5 years

Trading volume

Share price

Outlook – by CEO Hallvard Muri

AKVA group in brief

Leading technology and service partner Listed on Oslo stock exchange since 2006 Deliveries in 65 countries

• ver 40

years Companies in 11 countries. 998 employees

Solutions

Cage Based Technology Land Based Technology Software

OPEX Based Revenue CAPEX Based Revenue

Order backlog and inflow, 2015 through 2018

454414 647 951 376385 698 357468 751 385 586 844 93 283 430 479 118 437 620 286 417 629 264 412 537

2017 2018 2017 2017 2015 2016 2018 2016 2015

643

2016 2015 2016

998 697 1 077

2017 2018 2015 2018

547 1 430 494 822 1 318 886 1 380 649 1 381 332 340 486 588 268 283 475 290 360 454 287 489 525 101 103 51 80 250 304 214 57 92 63 72 36

2015 2017

350

2016 2018 2015

504

2017 2016 2017 2018 2015 2016 2017 2018 2015 2016

33 441

2018

417 368 589 533 639 557 348 561 778 546

Land Based Other

Order backlog Order intake

• Strong order backlog, 1,430 MNOK
• 34% of total order backlog relates to Land Based Technology (LBT)
• Order intake of 639 MNOK in Q1 2018

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Outlook – AKVA group

• Continuing positive outlook for most markets
• Land Based – focus on post smolt, high quote bank
• Execution of improvement programs, manufacturing,

sourcing and logistics

• Increasing focus and growth outside Nordic Markets
• Expanding services and OPEX based business, investing

in Marine Services

• Product improvements and optimization

• The transaction is based on an enterprise value of 750 million

NOK for all shares in Egersund Net AS

• The seller, Egersund Group, will receive 70 % in shares in AKVA

group and the remaining based on cash/debt assumption

• In total, 7.5 million AKVA shares will be issued to Egersund

Group, based on an AKVA price per share of NOK 70, which is NOK 2 above the last three months weighted average share price

• The transaction excludes properties currently held by Egersund

Net

• The transaction is subject to due diligence, necessary

government approvals and entering into of final transaction agreements

• The transaction is expected to be completed in Q3 2018

AKVA group has signed LOI to acquire Egersund Net

• Strategic transaction to become a more complete and

innovative supplier

– Further optimize the total system; cage, net and moorings – Offer more complete and efficient services – Optimize products’ life-cycle, including marine operations – More efficient customer interactions and interfaces

• Synergies mainly within sales, both in Nordic and in export

markets

• Transaction will strengthen AKVA group’s share of opex based

business

Egersund Net complement AKVA group’s product offering

Egersund Net overview

603 586 76 88 100 200 300 400 500 600 700 mNOK 2016 14 - 16 % 2018 B 2017

10 - 15% 54% 46%

Revenue Adjusted EBITDA

Revenue composition Products and Services Revenue and EBITDA

Products Services

• Nets and mooring solutions for the fish

farming industry

• In addition to traditional fish farming

nets, Egersund offers top nets, tube nets and special products such as sweep nets, fish sorting and mort collector nets

• Full range services; wash/disinfection,

repair and antifouling/coating

* Egersund Net AS, 2017 * Pro forma

Egersund Net overview

Egersund Net AS

UAB Egersund Net Egersund Trading AS NOFI AS

Emel Balik

100 % 100 % 50 % 50 % 70 % ~10 % 12 %

Grading Systems (UK) Ltd. Blue Planet AS Blue Farm AS Atlantis Subsea Farming AS

33 %

Transaction scope Locations