Q1 2020 Presentation Webcast 8 May 2020 Knut Nesse, CEO Andreas - - PowerPoint PPT Presentation

Q1 2020 Presentation

Webcast – 8 May 2020 Knut Nesse, CEO Andreas Pierre Hatjoullis, CFO

Highlights Financial performance Outlook Q&A

Agenda

Highlights Q1 2020 – by CEO Knut Nesse

• Order intake of 709 MNOK
• 100 MNOK contract for delivery of Tube Net in Norway

not included in order intake

• Strong quarter for Europe & Middle East, especially

within export from Norway

• Contract with Cooke Aquaculture for RAS facility in

Chile and Nordic Aqua Partners and China have been cancelled*

• Last twelve months order intake of 3,017 MNOK

Order intake

Order intake development

342 376 732 762 644 695 591 686 87 218 300 50 215 10 38 38 33 448 34 44 3Q18 1Q19 77 4Q 19 46 43 1 107 3Q 19 600 19 13 2Q18 1Q 20 1 425 471 4Q18 997 760 778 709 2Q19

• 36%

Cancelled LBT CBT SW LBT

*Both customers are indicating that it is likely the projects can start up again at a later stage

Technology for sustainable biology

• Both Scotland and export from Norway have had a

very good quarter

• Lower revenue in Caged Based in Nordic versus Q1

2019

• Low revenue in Land Based due to early phase of new

generation of projects and delayed projects

• The software business, Wise, sold in Q3 2019 was

included with 29 MNOK in Q1 2019

Revenue development

627 637 726 823 798 771 655 752 2Q19 3Q18 2Q18 4Q18 4Q19 1Q19 3Q19 1Q20 29

• 12%

Revenue

Wise revenue

Technology for sustainable biology

• EBITDA of 86 MNOK in the quarter
• Europe & Middle East have significantly improved EBITDA margins

compared to last year – Scotland and export from Norway as the main contributors

• The Egersund Net companies have improved margins compared to

same period last year

• The Land Based segment has delivered below both last year and

expected margins due to postponement of projects and new generation of projects

• The software business, Wise, sold in Q3 2019 was included with 4

MNOK in Q1 2019

EBITDA development

52 71 57 93 101 115

• 40

86 4Q19 2Q18 1Q20 4Q18 71 3Q18 1Q19 3Q19 2Q19 52 57 97 101 4 115

• 40

86

• 11%

EBITDA

Wise EBITDA

Technology for sustainable biology

– Order backlog at end of March of 1.7 BNOK – Strong momentum for Egersund Net – Order backlog in Americas region remains high – Tube Net sale in Norway in April valued at 100 MNOK, not yet included in backlog

High order backlog

825 726 908 982 961 955 1 020 1 045 449 359 448 629 611 569 674 605 1 650 3Q19 600 1 356 1 085 2Q18 3Q18 4Q18 1Q19 2Q19 4Q19 1Q20 1 524 1 572 1 274 1 611 2 294 +2% Cancelled Land Based

Order backlog

Key financial metrics

54 59 97 86 Q1 18 Q1 20 Q1 17 Q1 19 +59%

EBITDA

510 589 858 752 Q1 20 Q1 17 Q1 18 Q1 19 +47%

Revenue

0,60 0,94 0,87 0,59 0,11 0,10 0,15 0,15 Q1 20 Q1 19 Q1 17 Q1 18 +4%

EPS

In August 2018, number of shares increased from 25 834 303 to 33 334 303. When calculating the EPS the monthly average shares outstanding has been used. Amortization from intangible assets related to acquisitions

YTD YTD YTD

AKVA group Agents and distributors

Our presence

AKVA group’s geographical regions – absolute and relative

Revenue in geographical regions

90 106 74 59 76 83 132 125 139 177 145 136 155 144 138 412 392 506 633 603 541 428 483 637 Q3 18 Q2 18 Q4 19 42 Q4 18 Q1 19 Q3 19 Q2 19 798 Q1 20 627 726 852 771 655 752 Nordic Americas EME 64% 22% 61% 66% 20% 14% Q2 18 17% Q3 18 70% 24% 6% Q4 18 74% 17% 9% Q1 19 76% 70% 17% 7% Q2 19 Q3 19 20% 13% 22% 10% 65% Q4 19 18% 18% Q1 20

• Egersund Net contributing 89 MNOK in the quarter
• Stable development for the rental business (Scotland and

Norway) in 2020

• AKVA group Software with stable revenue compared to Q4 last

year

• Due to weather conditions in Norway lower activity within

service & after sales and the marine service business

• The Norwegian marine service business with solid order backlog

Development in OPEX based revenue

141 149 151 144 146 136 116 132 31 94 90 112 104 82 89 5 10 15 20 25 30 35 50 100 150 200 250 300 29,3% 4Q18 22,5% 33,8% 2Q18 2Q19 28,2% 3Q18 27,5% 1Q19 32,3% 31,2% 3Q19 30,1% 4Q19 1Q20 Egersund Net % of total revenue OPEX Based revenue

Revenue by product group and species

By product groups – Q1 2020 By species – Q1 2020

Cage Based Technology = Cages, barges, feed systems, nets and other operational systems for cage based aquaculture S&AS Cage Based = Service and after sales for cage based aquaculture Software = Software and software systems Land Based Technology = Recirculation systems and technologies for land based aquaculture S&AS Land Based = Service and after sales for land based aquaculture Salmon = 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

526 539 610 774 719 669 598 681 51 37 32 68 2Q18 4Q19 3Q18 798 55 Non seafood 46 47 Salmon 20 74 42 4Q18 627 852 23 66 13 35 2Q19 56 3Q19 39 1Q20 Other species 637 726 771 655 752 1Q19 370 334 352 500 446 439 349 453 98 140 201 189 218 212 180 204 116 124 129 118 42 40 44 44 39 28 16 17 Software 1 1 1Q20 4Q18 1 1Q19 655 95 3Q18 92 3Q19 1 109 4Q19 1 1 637 78 752 2Q18 LBT S&AS LBT CBT S&AS 726 2Q19 CBT 852 798 771 627

Technology for sustainable biology

• Next generation Tube Net solution ready for market, contract of 100 MNOK signed in April 2020
• High activity within the Net service business
• Cage based business in Chile continued on same high level as for 2019
• Export out of Norway with solid order intake and margins
• Land Based ending the quarter with some uncertainty caused by Covid-19 crisis, two large deliveries cancelled
• Completed acquisition of Newfoundland Aqua Service Ltd.
• Development of new camera system and AKVAconnect control system, progressing well
• Dividend of 1.00 NOK per share paid on 3 March 2020, before the main outbreak of Covid-19 in Norway

Q1 – Operational Highlights

Group Strategy process initiated – key themes

Land Based

On-growing Post Smolt

Digital

Data Platform Computer vision / AI

Innovation

Prioritization Fish health concepts

Learning & Development

People and competence Project and contract management

Tube Net

• A patented concept for improved fish welfare
• Proven to reduce lice infestation with 80%, with the potential to reduce

the lice precence to almost 0 if the tube is deep enough

• Suitable for AGD treatment
• Reduced risk of escape: damages to the upper part of the net will not be a

concern, as the fish is enclosed at the deeper part of the pen

• Reduced need for net cleaning
• Inner tube has been operated to 16 mtrs depth with great success
• Concept also includes subsea feeder and led lights to be operated for a

full cycle

Separate focus on full grow out RAS facilities

• AKVA as strategic partner in NAP
• Potential equity stake to secure partnership and

successful execution

• Learning and developing by a close follow-up on

all technical, operational and biological performance measures

• Final financing is still pending
• Additional projects in pipeline

Covid-19

 The Covid-19 virus together with a total collapse of the global oil price has had a massive impact around the globe. So far AKVA group has been moderately impacted. The major impacts financially for AKVA group has been related to two newly awarded RAS contracts on Land Based being cancelled. AKVA group has taken action with the following focus areas:

• The core of AKVA group is its employees, therefore AKVA group’s main focus is the safety and health of our

employees

• AKVA group has put in place a program to monitor and optimize the overall liquidity in the company
• AKVA group has implemented actions to maintain the security of supply during this crisis
• A steady order intake is paramount to ensure work for all AKVA employees and a prerequisite for the other

focus areas

Financial performance Q1 2020 – by CFO Andreas Pierre Hatjoullis

• Last twelve months order intake and revenue now at

3,017 MNOK and 2,977 MNOK respectively

• Nordic and Chile with decline in revenue compared to last years Q1
• Strong growth in export out of Norway and Scotland in the quarter
• Egersund Net with lower revenue in Q1 2020 versus to Q1 2019
• The land based segment had a revenue of 79 MNOK in the period,

down from 119 MNOK in Q1 2019

• Last year software revenues included 29 MNOK from Wise, an Icelandic

business which was sold in Q3 2019

Revenue

Q1 2020 – Financial highlights

510 537 484 557 589 627 637 726 852 798 771 655 752 Q1 Q4 Q2 Q3 2017 2018 2019 2020

• Europe & Middle East with solid performance in Q1
• Margins in Americas are slightly down in the period
• AKVA group ASA Nordic delivering improved EBITDA %
• Egersund Net contributing with higher margins in the quarter

compared to Q1 2019

• Low activity in the Land Based segment, amongst others due to one

specific project being temporarily delayed

EBITDA (MNOK)

Q1 2020 – Financial highlights

54 65 61 60 59 52 71 57 97 101 115

• 40

86

• 50

50 100 150 Q1 Q2 Q3 Q4 2017 2018 2019 2020

• 10
• 5

5 10 15 10,6% Q1 12,1% Q2 Q3 Q4 10,0% 11,4% 8,3% 12,6% 12,6% 11,1% 14,9% 10,8% 7,8%

• 6,1%

11,4%

EBITDA %

Nordic

• Reduction in results in CBT Nordic mainly due to

lower revenue in all entities in Q1 2020

• An increase in order backlog from Q4 2019 and

stable compared to Q1 2019

• Egersund Net with a solid improvement in EBITDA

from Q1 2019

• High activity in the net service business
• Lower activity in marine service business due to

weather conditions

Cage Based Technology

493 404 123 122 73 131 2 4 6 8 10 12 14 100 200 300 400 500 600 700 800 12,3% 11,1% 689 2019 Q1 2020 Q1 657

EBITDA % Americas EME Nordic

Revenue and EBITDA %

Americas

• Revenues almost on same level as 2019. A slight decrease

in EBITDA compared to last year

• Stabilized EBITDA margin in Chile, Q1 2020 on same level

as Q1 last year

• Newfoundland Aqua Service is included from 1 March

2020 EME

• The export from Norway was exceptionally high in Q1

2020 with high margins

• Scotland doubled its profit in Q1 2020 compared to same

quarter in 2019

• Strong contribution from Europe & Middle East

Cage Based Technology

493 404 123 122 73 131 2 4 6 8 10 12 14 100 200 300 400 500 600 700 800 2020 Q1 2019 Q1 11,1% 657 12,3% 689

EBITDA % EME Americas Nordic

Revenue and EBITDA %

• Strong order backlog of 605 MNOK at the end
• f Q1 2020 despite cancellation of order for

RAS in Chile from Cooke and deliveries to Nordic Aqua Partners in China

• Decrease in revenue and margins due to

postponement in project delivery and cancellation of contract

• New company formed in January 2020, AKVA

group Land Based Americas. Split out from AKVA group Chile

Land Based Technology

94 59 25 20 2 4 6 8 10 12 14 20 30 40 50 60 70 80 90 100 110 120 10,1% 3,7% 119 2019 Q1 2020 Q1 79

Americas EBITDA % EME Nordic

Revenue and EBITDA %

• Renewal of Fishtalk starting to materialize in

increased sales

• Leads and pipeline for Precision feeding software

(Observe) is increasing

• Last year revenue and EBITDA included 29 MNOK

and 4 MNOK respectively, from the divested software business, Wise, on Iceland

Software

10 11 5 5 29 10 20 30 40 50 60 70 5 10 15 20 25 30 35 40 45 17 44 8% 1 1 2019 Q1 2% 2020 Q1

EBITDA % Americas Wise EME Nordic

Revenue and EBITDA %

Financials – Detailed P&L

• Investment in subsidiaries accounted for by

equity method YTD Q1 classified as other

• perating revenues of 2.1 MNOK
• Minority shareholders (30%) in Grading Systems

Ltd and Newfoundland Aqua Service (1,5%)

P&L

2020 2019 2019

(MNOK)

Q1 Q1 Total OPERATING REVENUES 752 852 3 077 Operating costs ex depreciations 666 755 2 805 EBITDA 86 97 272 Depreciation 17 23 64 Depreciation lease assets 21 14 84 Amortization 10 12 62 EBIT 38 49 62 Net interest expense

• 6
• 5
• 22

Interest expense lease liabilities

• 5
• 5
• 20

Other financial items 5

• 7

Net financial items

• 6
• 11
• 49

EBT 32 38 13 Taxes 10 9

• 3

NET PROFIT 21 29 17 Net profit (loss) attributable to: Non-controlling interests 0,3 0,4 2,0 Equity holders of AKVA group ASA 21 29 15

Number of shares 33 156 33 306 33 156 Revenue growth

• 11,7 %

44,6 % 19,3 % EBITDA margin 11,4 % 11,4 % 8,8 % EPS (NOK)

0,63 0,87 0,44

Group financial profile – remains strong

422 469 535 565 409

50 100 150 200 250 300 350 400 450 500 550 600 1Q19 3Q19 2Q19 4Q19 1Q20

Available cash

• Including 253 MNOK of a 300 MNOK credit

facility in Danske Bank, as of Q1 2020

• 200 MNOK revolving credit facility fully utilized

in Q1 2020

Working capital Average working capital

307 496 465 287 447 2 4 6 8 10 12 14 16 18 50 100 150 200 250 300 350 400 450 500 10,8% 1Q19 16,5% 2Q19 14,8% 3Q19 9,3% 4Q19 15,0% 1Q20

• The graph shows absolute working capital and

working capital relative to last twelve months revenue 307 385 406 389 424 5 10 15 50 100 150 200 250 300 350 400 450 1Q20 1Q19 10,8% 4Q19 12,8% 2Q19 12,9% 3Q19 12,6% 14,2%

• 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 6,8% 35 556 4Q 2017 14,2% 78 936 4,3% 25 517 1Q 2018 42 852 2Q 2018 8,4% 2,6% 16 881 43 888 3Q 2018 (TNOK) 4Q 2018 5,8% 42 225 30 325 4,2% 1Q 2019 3,0% 23 913 2Q 2019 64 893 3Q 2019 6,7% 4Q 2019 1Q 2020 4,0% CAPEX CAPEX/Sales % 5 559 17 906 Ordinary Rental 6 860 Intangible

CAPEX breakdown 2020 CAPEX and CAPEX/Revenue %

Net interest bearing debt/EBITDA of 3,0

Net interest bearing debt (MNOK) and net debt/EBITDA

309 371 632 531 726 662 632 780 2,6 2,5 1,9 2,2 1,8 2,3 3,0 0,35 0,70 1,05 1,40 1,75 2,10 2,45 2,80 3,15 100 200 300 400 500 600 700 800 1Q18 1,3 1,6 1Q19 2Q19 2Q18 3Q18 4Q18 3Q19 4Q19 1Q20 605 NIBD/EBITDA (12 mth rolling) NIBD Change in net interest bearing debt (TNOK)

• Excluding IFRS 16 liabilities

Net interest bearing debt 31.12.2019 631 567 EBITDA

• 86 000

Income taxes paid 3 389 Net interest paid 11 080 Capex 30 325 Acquisitions 15 458 Long-term financial assets 9 818 Paid dividend 34 955 Sale of fixed assets

• 129

Currency effects

• 18 071

Other changes in working capital 147 119 Net change 147 945 Net interest bearing debt 31.03.2020 779 513

Group financial profile – remains strong, continued

Equity and Equity / Total Balance NIBD / Equity

491 504 1 017 1 063 1 055 1 068 1 096 991 1 037 10 20 30 40 50 100 200 300 400 500 600 700 800 900 1 000 1 100 37,8% 3Q18 2Q18 1Q18 28,0% 26,8% 38,2% 39,3% 4Q18 38,4% 1Q19 2Q19 1Q20 39,8% 3Q19 37,9% 4Q19 37,3% 0,63 0,74 0,62 0,57 0,49 0,68 0,60 0,64 0,75 0,0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 4Q19 2Q19 1Q18 2Q18 3Q18 3Q19 4Q18 1Q19 1Q20

• Total effect of IFRS 16 on the balance sheet end of March 2020 is 423 MNOK, negatively affecting the equity ratio when comparing to quarters before
• 2019. Not included in graph above
• Equity ratio would be 31,2% including IFRS 16 liabilities

Group financial profile, continued

ROCE ROACE

1Q18 2Q18 4Q19 16,4% 3,6% 13,7% 1Q19 7,9% 3Q18 7,0% 4Q18 2Q19 7,9% 8,5% 9,8% 3Q19 1Q20 2,6% 11,9% 16,8% 3Q18 1Q20 2Q18 9,1% 1Q18 14,5% 4Q18 8,6% 1Q19 9,0% 2Q19 10,1% 3Q19 3,3% 4Q19 2,7%

• Exceptional items impacting Q4 ROCE
• ROCE is calculated ex balance sheet items of IFRS 16
• ROACE is calculated with the average balance sheet items last four quarters
• ROACE is calculated ex balance sheet items of IFRS 16

Cash flow statement

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW 2020 2019 2019

(NOK 1 000)

Q1 Q1 Total Net cash flow from operations 76 484 78 950 180 153 Net cash flow from change in w orking capital

• 147 119

57 145 30 616 Net cash flow from operational activities

• 70 635

136 095 210 769 Net cash flow from investment activities

• 55 474
• 22 695
• 140 099

Net cash flow from financial activities 108 270

• 102 347
• 65 868

Net change in cash and cash equivalents

• 17 839

11 053 4 801 Net foreign exchange differences 12 357

• 3 329
• 664

Cash and cash equivalents at the beginning of the period 160 999 156 862 156 862 Cash and cash equivalents at the end of the period 155 517 164 587 160 999

Balance sheet

BALANCE SHEET 2020 2019 2019 (MNOK) 31.03 31.03 31.12

ASSETS 3 327 3 196 3 034 Intangible non-current assets 1 094 1 085 1 028 Tangible non-current assets 241 336 364 Financial non-current assets 85 74 75 IFRS 16 - RoU Asset 547 443 417 Inventory 573 455 514 Receivables 633 637 476 Cash and cash equivalents 156 165 161 LIABILITIES AND EQUITY 3 327 3 196 3 034 Equity 1 034 1 055 986 Minority interest 4 1 4 Long-term interest bearing debt 862 579 665 Short-term interest bearing debt 73 117 127 IFRS 16 - Lease Liability 423 446 425 Non-interest bearing liabilities 932 999 825

Dividend Policy

• The company is aiming to give the shareholders a competitive return
• n investment by a combination of cash dividend and share price

increase

• The company’s dividend policy shall be stable and predictable
• When deciding the dividend the Board will take into consideration

expected cash flow, capital expenditure plans, financing requirements/compliance, appropriate financial flexibility, and the level of net interest bearing debt

• The company needs to be in compliance with all legal requirements

to pay dividend

• The company will target to pay dividend twice a year
• A dividend of NOK 1.00 per share was paid on 3 March 2020, before

the main outbreak of Covid-19 in Norway

Dividend and dividend policy

1,00 1,00 1,00 0,75 1,25 1,50 1,75 1,00 2018 2008 2016 2014 2017 2015 2019 2020 Q1 YTD

Cash Dividend

Largest shareholders

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

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

No of shares % Account name Type Citizenship 20 703 105 62,1 % EGERSUND GROUP AS NOR 3 900 000 11,7 % WHEATSHEAF INVESTMENTS LIMITED GBP 1 192 893 3,6 % SIX SIS AG Nominee CHE 899 058 2,7 % VERDIPAPIRFONDET NORDEA KAPITAL NOR 825 932 2,5 % VERDIPAPIRFONDET ALFRED BERG GAMBA NOR 659 231 2,0 % VERDIPAPIRFONDET NORDEA AVKASTNING NOR 435 740 1,3 % VERDIPAPIRFONDET NORDEA NORGE PLUS NOR 356 300 1,1 % MP PENSJON PK NOR 344 883 1,0 % EQUINOR PENSJON NOR 329 950 1,0 % J.P. Morgan Bank Luxembourg S.A. Nominee LUX 300 000 0,9 % J.P. Morgan Bank Luxembourg S.A. Nominee FIN 298 000 0,9 % Norron Sicav - Select LUX 177 883 0,5 % AKVA GROUP ASA NOR 150 000 0,4 % DAHLE NOR 110 214 0,3 % VERDIPAPIRFONDET DNB SMB NOR 100 000 0,3 % UBS Europe SE Nominee LUX 100 000 0,3 % ASKVIG AS NOR 100 000 0,3 % BERGEN KOMMUNALE PENSJONSKASSE NOR 81 912 0,2 % EQUINOR INSURANCE AS NOR 81 401 0,2 % NORSK LANDBRUKSKJEMI AS NOR 31 146 502 93,4 % 20 largest shareholders 2 187 801 6,6 % Other 33 334 303 100,0 % Total number of shares as per 31.03.2020

No of shares % Origin No of shareholders

26 338 237 79,0 % Norway

823

3 915 920 11,7 % Great Britain

17

1 281 470 3,8 % Switzerland

5

758 500 2,3 % Luxembourg

4

362 463 1,1 % Finland

5

677 713 2,0 % Other

68 Total number of shareholders: 968 - from 28 different countries

5 000 000 10 000 000 15 000 000 20 000 000 25 000 000 30 000 000 20 40 60 80 100 apr.19 mai.19 jun.19 jul.19 aug.19 sep.19

• kt.19

nov.19 des.19 jan.20 feb.20 mar.20

Last 12 months

Trading volume

Share price 30 000 000 60 000 000 90 000 000 120 000 000 20 40 60 80 100 2015 2016 2017 2018 2019 2020

Last 5 years

Trading volume

Share price

Outlook – by CEO Knut Nesse

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 10 countries. 1 444 employees

Solutions

Cage Based Technology Land Based Technology Software

OPEX Based Revenue CAPEX Based Revenue

Order backlog and inflow, 2017 through 2020

647 951982 698825961 751726954 844908 430 479629605 620449 611 629 359 569 537448 674 600

2019 2018 2017 2018 2019

1 045 1 085

2020 2020 2017 2018 2019 2020 2017 2018

1 356 1 318 1 020

2019 2020

1 077 1 381 1 274 1 430 1 611 1 650 1 572 1 380 1 523 2 294

2017

486 588 806 699 475 384 682 454 414 672 525 779 610 103 300 304 51 218 215 55 51

2018 2018 2019 2019 2017

709 589 600

2020 2019

87

2018

77

2017

92

2020

34 1 425

2017

778

2019 2020

33

2017 2018 2020

10 639 1 106 778 471 760 546 448 557 997

Wise Other Land Based Cancelled

Order backlog Order intake

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Outlook – AKVA group

• Order backlog remains high
• Service station for nets to be built in northern Norway (with partner), plans for additional

station underway

• New generation tube net (preventive sea lice solution) launched, strong interest in the

market and contract of 100 MNOK signed in April 2020

• Presence in eastern Canada, completed the purchase of 70% of the shares in

Newfoundland Aqua Service Ltd in February

• Cost savings program initiated
• Maintained focus on full grow out RAS facilities within the Land Based segment, despite

setback on China project

• Digitalization strategy making further progress with additional installations for Precision

feeding – pipeline is growing

Norway should strengthen and evolve our natural comparative advantages in the aftermath of Covid-19 by granting new innovation permits for coastal

• farming. This will:
• Advance Norway's natural advantages and affirm the position as the

technological leader of fish farming

• Help promote focus on sustainable fish farming with new innovative ways

to design, build and operate

• Create activity and incentives for supplier industry and start-ups

AKVA’s input to Norwegian authorities