Q3 2016 Presentation Oslo - November 3 rd , 2016 Trond Williksen, - - PowerPoint PPT Presentation

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Q3 2016 Presentation

Oslo - November 3rd, 2016 Trond Williksen, CEO Eirik Børve Monsen, CFO

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Agenda

Highlights Financial performance Outlook 1 2 3 Q&A 4

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Highlights Q3 2016 - by CEO Trond Williksen

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High market activity – growth strategy continued

4

Third quarter 2016 – Highlights

• Overall good financial performance - 10.8% EBITDA margin
• P&L growth softened by Americas and restructuring of AKVA group Denmark
• Growth strategy continues with acquisition of Sperre AS – the leading ROV provider,

increased capacity in Helgeland Plast and increased presence in the Mediterranean

• High market activity – strong order inflow and best order backlog ever of MNOK 886

YTD 2016 – Highlights

• Best first nine months ever – revenue and EBITDA
• Strong financial position
• Dividend of NOK 0.75 per share paid in Q3 2016

941 1 081 1 154

90 108 121

9,6 % 10,0 % 10,4 % 4,0 % 5,0 % 6,0 % 7,0 % 8,0 % 9,0 % 10,0 % 11,0 % 12,0 % 13,0 %

200 400 600 800 1 000 1 200

2014 - Q3 - YTD 2015 - Q3 - YTD 2016 - Q3 YTD

MNOK Operating revenue EBITDA EBITDA %

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Stable performance and growth continues

5

+33% +21%

41 38 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 MNOK

EBITDA

355 354 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 MNOK

Revenue

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318 417 187 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 MNOK

Order Inflow

643 414 385 468 LBT 283 LBT 437 LBT 417 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 MNOK

Order Backlog

Growth in order backlog continues

6

+31% +38% 886 697 820

• NOK 1.4 billion in order inflow YTD 2016
• In Q3 2015 the order backlog of Aquatec Solutions was included for the first time (with MNOK 187)
• 31% YoY growth in operational order inflow when adjusting for Aquatec Solutions

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AKVA group – uniquely positioned for future growth

Leading technology solutions and service partner to the global aquaculture industry Global presence - subsidiaries in 8 countries 768 employees Market cap of NOK ~2076m and net debt of NOK 213m

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Presence in all main farming regions

Map of activities & revenue per region, Q3 2016

Nordic Americas Export 77% 11% 12%

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Strategic priority to increase the proportion of OPEX based revenue

OPEX based vs CAPEX based revenue, Q3 2016 Comments

• OPEX based revenue defined as our revenue booked as OPEX in our

customers P&L

• Aim of increasing relative share of OPEX based revenue through software

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

• Introduction of rental business model in Norway in late 2014. Successfully

introduced in UK and Canada before the introduction in Norway

• 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, our provider of diving, ROV and other services to the

salmon farming sector (Farming Services)

• Development of Farming Services still in an early stage – opportunities for

consolidation

CAPEX based revenue 69 % OPEX based revenue 31 %

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Revenue by product groups and species

10

• Cage based technologies = Cages, barges, feed systems and other
• perational systems for cage based aquaculture
• Software = Software and software systems
• Land based technologies = Recirculation systems and technologies for

land based aquaculture

By product groups – Q3 2016 By species – Q3 2016

• Salmon = 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

Cage based 69 % Software 9 % Land based 22 % Salmon 75 % Other Species 11 % Non Seafood 14 %

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Acquisition of Sperre AS – the leading ROV producer

11

• Sperre AS becomes the “center of excellence” in AKVA group in terms
• f ROV technologies as well as relevant subsea technologies
• The intention and ambition is to develop undisputed industrial

leadership in the ROV and subsea technology area within aquaculture

• AKVA group ASA acquires 66% of Sperre AS. Closing of the transaction

will take place on November 4th, 2016

• The enterprise value for all the shares in Sperre AS is NOK 126.9
• million. In addition AKVA will pay an adjustment amount based on the

net debt and working capital position at closing

• AKVA group ASA have an option to buy the remaining shares after

three years where the pricing is based on financial performance in the three year period

• The acquisition will be paid in cash and will be financed with a loan

from Danske Bank

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Changes in operational structure – LBT carved out as a separate Group entity

12

• retgrega
• eter
• ujdyyt

Service & Aftermarket CBT and LBT

CEO

Trond Williksen

CFO

Eirik B Monsen

Technology & SW

Inge Forseth

Nordic

Per A Hjetland

Americas

Andrew Campbell

Exports

Trond Severinsen IR , Treasury and Group Controling WISE lausnir AKVA Group Software AS Technology R&D 1 HW R&D - AKVA Smart products Strategic projects AKVA Sales Nordic CBT Project, production and supply chain Nordic CBT Service & Aftermarket Nordic CBT and LBT Helgeland Plast AS AKVA Sales Americas CBT

• Project,

production and supply chain Americas CBT Service & Aftermarket Americas CBT and LBT AKVA group North America AKVA Sales Exports CBT Project and supply chain Exports CBT AKVA group UK / Europe David Thorburn AKVA group Turkey (reports to David Thorburn) QA Coordinator AKVA Group Australasia Group Marketing AKVA Marine Services AS

LandbasedTecnology

Morten Nilsen Land Based Projects sales and delivery AKVA Group DK Plastsveis AS Aquatech Solutions A/S AKVA group Services AS (rental) AKVA group Chile Ltd. WISE Blue AS Sistemas de Recirculation Group HR

New group entity

Sperre AS

New unit

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Helgeland Plast – expanding capacity

13

• Investing in new factory facility - expanding capacity on cage, boat and pipe
• More efficient boat production
• HP will double the production capacity of Polarcirkel Boats during 2017
• Solved by streamlining and outsourcing parts of the production
• Will reduce delivery time significantly
• Gives us more flexibility
• Enable us to deliver to new customer groups

Picture: Illustration of new Longyearbyen harbor from Snøhetta Picture: Remote controlled boat delivered to the Norwegian Army

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Expansion into the Mediterranean - new office in Spain

14

• AKVA group is about to establish an office on

the east coast of Spain

• Due to positive signs in the Sea Bass and Sea

Bream market in the Mediterranean

• This office will strengthen our position in

this region

• We will have service resources on the

ground to support our customer base in the region

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Deliveries into Iran

15

• AKVA group has worked actively in Iran for 2-3 years
• Second cage farm delivered (Bushehr Aramseyd Co. Reysali

Delvari Dam)

• Sales of both cage based and land based technology
• Government strategy: Grow cage farming by 200.000 tons in 5

years (Barramundi, Sea Bream, Rainbow Trout, Sturgeon, etc)

• Already issuing licenses, providing financing and setting

deadlines for starting-up

• Equally big market both for cage based and land based

technology

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The project

• Established in partnership with the companies Sinkaberg-Hansen AS

and Egersund Net AS – 33.3% of the shares each on February 1st, 2016

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

16

• ATLANTIS is in dialogue with the Directorate of

Fisheries and we are waiting for a final decision regarding development licences

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Financial performance Q3 2016 – by CFO Eirik Børve Monsen

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Q3 2016 - Financial highlights

18

• Stabilizing on a higher EBITDA margin - 10.8% in Q3
• AKVA group’s diversified operations stabilize revenue and margins – makes

the Group more robust

• On the negative side;
• Americas with weaker performance YoY – due to challenging market conditions

(MNOK 8.7 in reduced EBITDA YoY in Q3)

• Restructuring of AKVA group Denmark - a step to make this a more efficient entity

(MNOK 4.9 in negative EBITDA in Q3)

• Strong balance sheet
• A interim dividend of 0.75 NOK per share paid out in Q3 2016
• 50

100 150 200 250 300 350 400 450 1Q 2Q 3Q 4Q 2013 2014 2015 2016

MNOK

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Q3 2016 - Financial highlights, continued

19 EBITDA EBITDA % Stabilizing on a historical higher EBITDA-level both in NOK and in % The medium term target of 10% EBITDA on a annual basis – achieved for the third quarter in a row

• 5

10 15 20 25 30 35 40 45 1Q 2Q 3Q 4Q 2013 2014 2015 2016

MNOK

0% 2% 4% 6% 8% 10% 12% 14% 1Q 2Q 3Q 4Q 2013 2014 2015 2016

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160 167 58 36 59 42 277 244 10,5 % 10,4 %

0% 2% 4% 6% 8% 10% 12% 50 100 150 200 250 300 2015 Q3 2016 Q3

CBT (Revenue & EBITDA %)

Nordic Americas Export EBITDA %

Cage Based Technologies

20

Nordic

• Good performance in Q3
• A wide range of products continue to contribute financially – AKVAsmart

products, Barges, Polarcirkel cages, service and rental

• The Farming Services area with AKVA Marine Services is performing well

Americas

• Reduced activity in Americas this quarter - MNOK 8.7 in reduced EBITDA

YoY in Q3 and MNOK 23.2 in reduced EBITDA YoY YTD 2016

• Low activity in Chile – reduced service and technology sales due to

challenging market conditions

• We have over the last years reduced our financial exposure in Chile
• significantly. The Chilean operation is now leaner and well prepared for an

upturn in the market when this happens

• Canada with another slow quarter
• Australia - a small but profitable operation

Export

• UK with another decent quarter – high level of OPEX based revenues
• Turkey continues with another very good quarter
• We experience increased activity in the Sea Bass and Sea Bream industry in

the Mediterranean

• Export to emerging markets – small but profitable impact in Q3

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Software

21

• Another good quarter
• AKVA group Software AS and Wise

lausnir ehf – with improved performance YoY

• YTD improved performance, both

topline and margins, despite divesting WiseDynamics in November 2015

• Software continues to invest in new

product modules, which is expected to strengthen the financial performance of the SW segment further 24 29 7 3 1 1 32 33 26,1 % 24,3 %

7% 12% 17% 22% 27% 32% 5 10 15 20 25 30 35 2015 Q3 2016 Q3

SW (Revenue & EBITDA %)

Nordic Americas Export EBITDA %

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Land Based Technologies

22

• Good performance in Aquatec Solutions and Plastsveis
• and the high market activity continues
• Weak quarter for AKVA group Denmark A/S due to

restructuring to make the unit more efficient (MNOK 4.9 in negative EBITDA in Q3). The work to improve and make this a more streamlined entity will continue into Q4

• Land based is becoming a significant part of the Group,

with:

• 85% increase YoY in revenues YTD 2016
• 22% of total Group revenue in Q3
• 47% of total order backlog
• An area with high market activity

45 76 1 1 46 77 7,0 % 6,3 %

0% 10% 10 20 30 40 50 60 70 80 90 2015 Q3 2016 Q3

LBT (Revenue & EBITDA %)

Nordic Americas EBITDA %

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P&L 2016 2015 2016 2015 2015

(MNOK)

Q3 Q3 YTD YTD Total OPERATING REVENUES 353,8 354,7 1 154,5 1 081,3 1 425,3 Operating costs ex depreciations 315,5 314,2 1 034,0 973,2 1 290,2 EBITDA 38,3 40,6 120,5 108,0 135,2 Depreciation 17,5 12,2 48,8 33,5 47,5 EBIT 20,8 28,4 71,7 74,5 87,7 Net interest expense

• 1,0
• 0,8
• 4,9
• 3,6
• 5,4

Other financial items

• 3,6

0,3

• 15,0

0,3

• 4,3

Net financial items

• 4,5
• 0,5
• 19,9
• 3,3
• 9,6

EBT 16,2 27,8 51,8 71,2 78,1 Taxes 5,5 8,0 16,0 20,4 19,7 NET PROFIT 10,8 19,8 35,7 50,8 58,4 Net profit (loss) attributable to: Non-controlling interests 1,4 0,7 0,3 1,2 1,6 Equity holders of AKVA group ASA 9,4 19,2 35,4 49,6 56,8

Revenue growth

• 0,3 %

7,6 % 6,8 % 14,9 % 14,4 % EBITDA margin 10,8 % 11,4 % 10,4 % 10,0 % 9,5 % EPS (NOK)

0,36 0,74 1,37 1,92 2,20

Financials – Detailed P & L

23

• Increased depreciation mainly

due to increased rental CAPEX and amortization

• Increased due to higher net

debt

• Mostly currency and

acquisition cost - higher than normal

• Minority shareholders from Q2

2016 and onwards (35%) in AKVA Marine Services AS and (49%) in Wise Blue AS

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100 127 109 132

8,4 % 9,1 % 7,5 % 8,8 %

0 % 2 % 4 % 6 % 8 % 10 % 12 % 20 40 60 80 100 120 140 160 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 MNOK

MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK MNOK

Group financial profile – remains strong

Available cash Working capital

+46 MNOK

• Strong working capital level – despite record high activity
• Due to strong capital discipline in the Group
• Including a 90 MNOK credit facility in Danske Bank

183 144 147 157 226 160 230 203 165 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 MNOK

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Group financial profile – remains strong, continued

25

ROCE Equity

• Two dividends paid during the last 12 months of total 45.1 MNOK

+43 MNOK +5.6 percentage points

375 389 403 417 443 428 435 460 437

44,8 % 38,0 % 37,1 %

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 50 100 150 200 250 300 350 400 450 500 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 MNOK Total Equity Equity %

15,2 % 14,1 % 12,3 % 15,2 % 13,9 % 14,7 % 17,8 % 14,0 % 12,4 % 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16

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Net debt/EBITDA of 1.4

26

Change in net debt (TNOK) Net debt (MNOK) and net debt/EBITDA

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)

Net debt 30.06.2016 172 172 EBITDA

• 38 287

Income taxes paid

• 447

Net interest paid 985 Capex paid 24 407 Acquisitions / Divestments 884 Paid dividend 19 376 Sale of fixed assets

• Currency effects

7 634 Other changes in working capital 26 768 Net change 41 319 Net debt 30.09.2016 213 491

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Balance sheet

27

BALANCE SHEET 2016 2015 (MNOK) 30.09 30.09

ASSETS 1 179 1 163 Intangible non-current assets 411 340 Tangible non-current assets 138 88 Financial non-current assets 5 8 Inventory 178 209 Receivables 321 382 Cash and cash equivalents 126 136 LIABILITIES AND EQUITY 1 179 1 163 Equity 427 439 Minority interest 11 3 Long-term interest bearing debt 265 188 Short-term interest bearing debt 75 46 Non-interest bearing liabilities 402 487

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CAPEX

28

Capex (TNOK) and capex / sales (%)

40 969 11 638 11 981

CAPEX breakdown 2016 YTD (TNOK)

Ordinary Rental Intangible (R&D)

11 017 18 633 10 994 16 037 15 871 32 853 23 114 17 067 24 407 3% 6% 3% 4% 4% 10% 6% 4% 7%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 5 000 10 000 15 000 20 000 25 000 30 000 35 000 Q3 - 2014 Q4 - 2014 Q1 - 2015 Q2 - 2015 Q3 - 2015 Q4 - 2015 Q1 - 2016 Q2 - 2016 Q3 - 2016

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Largest shareholders

29

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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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Outlook – by CEO Trond Williksen

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Order backlog and inflow

31

Order backlog Order inflow

• Highest order backlog ever
• 47% of total order backlog relates to Land based technology (LBT)
• The strong market activity continues into Q4

414 385 468 LBT 283 LBT 437 LBT 417 100 200 300 400 500 600 700 800 900 1000 1Q 2Q 3Q 4Q

MNOK

• NOK 1.4 billion in order inflow YTD 2016
• In Q3 2015 the order backlog of Aquatec Solutions was included

for the first time (with MNOK 187)

• 31% YoY growth in operational order inflow when adjusting for

Aquatec Solutions

187 100 200 300 400 500 600 1Q 2Q 3Q 4Q

MNOK

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Positive outlook maintained

32

• Good mid term outlook due to high market activity and large order backlog
• Good demand in the Nordic cage based segment continues
• Land based segment with growing activity - is expected to continue and is becoming a larger part of AKVA
• UK and Europe is expected to perform well going forward with growing order backlog
• Canada experience slightly less project sales so far compared to last year – moderate expectations going forward
• Still low expectations in Chile, but clear signs of improvement. Our financial exposure in Chile is reduced over the last years
• Turkey and Australia are expected to continue to perform well in the next quarters with good order backlog
• Exports to emerging markets with a more optimistic view than last year. Activity still expected to fluctuate due to nature of

business

• We continue to actively seek strategic M&A opportunities within relevant segments
• We continue our effort to build service and after sales as a key business element in all markets and segments

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Q & A

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