Q4 2016 Presentation Oslo February 22 nd , 2017 Hallvard Muri, CEO - - PowerPoint PPT Presentation

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Q4 2016 Presentation

Oslo – February 22nd, 2017 Hallvard Muri, CEO Andreas Pierre Hatjoullis, CFO (acting)

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Agenda

Highlights Financial performance Outlook 1 2 3 Q&A 4

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Highlights Q4 2016 - by CEO Hallvard Muri

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High order backlog – solid underlying performance

4

Fourth quarter 2016 – Highlights

• Record high sales and order intake
• Order backlog end of year approximately 1.0 BNOK
• EBITDA in the quarter hampered by material clean-up and

restructuring cost of 19.9 MNOK related to AKVA group Denmark

• Growth strategy continues with acquisition of Sperre – the

leading ROV provider, increased capacity in Helgeland Plast

414 385 468 586 649 643 493 547 412 417 437 283 4Q16 998 +54% 2Q15 697 4Q15 1Q16 3Q15 822 2Q16 886 3Q16 1Q15 Land based

MNOK

Order Backlog

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Strong growth in order intake

5

• Total of 2.0 BNOK in order intake 2016
• Record high order intake Q4
• Cage Based segment 420 MNOK in Q4, up 66% YoY
• Driven in particular by Nordic and recovery in Chile
• Software segment 69 MNOK, almost double from

same period last year

• Most of the increase comes from Wise Ehf
• Land Based segment 72 MNOK in Q4, up 14% YoY

33 44 31 32 69 420 329 252 296 254 63 72 57 250 101 505 348 367

CBT LBT

561 +60%

SW

2Q15 533 417 441 1Q16 4Q15 350 1Q15 3Q15 3Q16 4Q16 2Q16

MNOK

Order Intake

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Record quarter on sales

6

• Operating revenue of 449 MNOK in Q4 2016 (+105 MNOK

from Q4 2015):

• Main increase from Cage Based segment Nordic region,

+97 MNOK compared to Q4 2015

• Positive development in Chile YoY (+13 MNOK), as

positive market sentiment start giving effect

• Slight decrease in revenue from Land Based segment,

all related to restructuring in AKVA group Denmark

449 354 408 393 344 355 402 325 1Q15 2Q15 1Q16 2Q16 4Q15 3Q16 3Q15 +30% 4Q16

MNOK

Revenue

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Restructuring cost in Denmark w/material impact on Q4-16

7

• Good quarter for Nordic region with solid contribution from

all entities

• Positive development in Chile and turn around from loss

making situation last few quarters

• Aquatec Solutions (AQS) and Plastsveis very strong

performance, but partly offset by earn-out to former shareholders of AQS

• Ongoing restructuring in AKVA group Denmark gave a

negative effect of 19.9 MNOK in EBITDA

27 41 41 27 40 43 38 24 4Q16 3Q16 1Q16 4Q15 3Q15 2Q16 1Q15 2Q15

EBITDA

MNOK

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Strong underlying performance

8

• Restructuring and clean-up in AKVA group Denmark

negative effect (one-off’s) of 19.9 MNOK

• Aquatec Solutions earn-out element reduced EBITDA by

4 MNOK

48 24 4 20 Q416* Aquatec AKVA DK Q416 27 Q415

MNOK

EBITDA

*Adjusted EBITDA

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Strong order intake – solid underlying performance

9

2016 – Highlights

• Total order intake for the year close to 2 BNOK,

24 % up from 2015

• Year on year growth in revenue 12.5%
• Total EBITDA 144 MNOK, up from 135 MNOK

last year

• Balance sheet KPI’s remains strong
• Acquisition of AD Offshore AS in April and

Sperre AS in November

1 246 1 425 1 603 2016 2015 2014

EBITDA

MNOK

103 135 144 2015 2016 2014

Revenues

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• Leading technology and service partner to the global aquaculture industry
• Global presence and subsidiary in 8 countries
• Deliveries in over 65 countries during the last 40 years
• Approx. 792 employees
• 2016 revenues of 1 603 MNOK
• Listed on Oslo Stock Exchange since 2006
• Market cap of ~2 012 MNOK and net debt of 212 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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Presence in all main farming regions

Revenues from regions:

Q4 2015 Q4 2016 Nordic 73 % 76 % Export 15 % 14 % Americas 12 % 10 %

Nordic Americas Export AKVA group Agents & Distributors

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CAPEX based revenue 72 % OPEX based revenue 28 %

(74%) (26%)

Strategic priority to increase the proportion of OPEX based revenue

OPEX based vs CAPEX based revenue, Q4 2016 Comments

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

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

*(Figures in brackets shows Q4 2015)

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Revenue by product groups and species

17

• Cage based technologies = Cages, barges, feed systems and other
• perational systems for cage based aquaculture
• S&AS Cage based = Service and after sales for cage based aquaculture
• Software = 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 – Q4 2016 By species – Q4 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

Salmon 82 % Other Species 8 % Non Seafood 10 % Cage Based

tech 55 % S&AS Cage Based 19 % Land Based tech 17 % S&AS Land Based 0 % Software 9 %

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Q4 – Operational Highlights

• Closing of acquisition of Sperre AS
• Atlantis – Update on development licenses

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Acquisition of Sperre AS – the leading ROV producer

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• Sperre AS becomes the “center of excellence” in AKVA group in

terms of ROV technologies as well as relevant subsea technologies

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

transaction took place on November 4th, 2016

• The enterprise value on a 100% basis was 126.9 MNOK
• AKVA group ASA has an option to buy the remaining shares

after three years

• The acquisition is paid in cash and was financed with a loan

from Danske Bank

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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. On November 26th Norwegian Directorate of Fisheries informed ASF that the concept fell within the general scope of the scheme for awarding development fish-farming licenses. 2. The Directorate will continue on to consider the concept further with an objective to award one or more licenses. 3. ASF is currently in a process with the Directorate to provide additional information, including target financial criteria for the concept. 4. In parallel, the project team is planning and preparing for large scale testing

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Financial performance Q4 2016 – by acting CFO Andreas Pierre Hatjoullis

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Q4 2016 - Financial highlights

22

• Record high quarterly turnover
• The Group is more robust – underlying good performance

stabilizing higher margins

• but the quarter offset by restructuring costs in AKVA

group Denmark

• Strong operational cash flow
• Dividend of 0.50 NOK per share to be paid out in Q1 2017

Revenue

246 180 270 222 305 330 301 310 344 355 402 325 449 354 408 393 Q2 Q1 Q4 Q3 2016 2014 2013 2015 MNOK

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0% 2% 4% 6% 8% 10% 12% 14% 1Q 2Q 3Q 4Q

MNOK

Q4 2016 - Financial highlights, continued

23

EBITDA (MNOK) EBITDA %

Underlying performance stabilizing on a historical higher EBITDA-level both in NOK and in % EBITDA offset by restructuring in AKVA group Denmark and earn-out to former shareholders of Aquatec Solutions (marked in grey in graphs)

5 10 15 20 25 30 35 40 45 50 1Q 2Q 3Q 4Q

MNOK

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Cage Based Technologies

24

Nordic

• Revenue YoY up 72% (50% 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 Americas

• Increased activity in Chile – delivering a positive EBITDA of 1.8

MNOK in the quarter

• Our operations in Chile is set to meet higher activity when the

market conditions improves

• We experienced a slow quarter in Canada, but they are delivering

positive margins Export

• UK delivering a decent quarter due to high level of OPEX based

revenues

• Turkey with another very good quarter - ending 2016 as their best

year

• Continued increased activity in the Sea Bass and Sea Bream

industry in the Mediterranean

• Export to emerging markets – mainly deliveries to Iran

136 233 56 42 40 50 100 150 200 250 300 350 2 4 6 8 10 220 2016 Q4 44 2015 Q4 4,6% 331 8,5%

Nordic Americas EBITDA % Export

CBT (Revenue and EBITDA%)

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Land Based Technologies

25

• Aquatec Solutions coming in strong in Q4, but this

is partly offset by earn-out to former shareholders

• f Aquatec Solutions
• Plastsveis delivering a strong quarter – increasing

EBITDA with MNOK 4.9 YoY

• The restructuring of AKVA group Denmark A/S, to

strengthen the company moving forward, has contributed negatively in Q4 with MNOK 24 YoY

84 75 75 8 10 20 30 40 50 60 70 80 90

• 20
• 10

10 20 77 2016 Q4 2 2

• 14,7%

2015 Q4 9,8% 85 86 2 2016 Q4 revised 11,3%

Nordic EBITDA % Americas LBT Effects

LBT (Revenue and EBITDA%)

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Software

26

• AKVA group Software AS with stable

performance YoY

• Wise experienced lower margins due to

pressure on salary costs on Iceland

• Ongoing investments in new product

modules expected to strengthen the financial performance of the SW segment further

• Q4 2015 includes the gain on

WiseDynamics in MNOK 1.5 explaining the deviation YoY 34 36 3 3 5 10 15 20 25 30 35 40

• 20
• 10

10 20 30 1 1 17,2% 38 2015 Q4 22,4% 2016 Q4 40

Nordic Americas Export EBITDA %

SW (Revenue and EBITDA%)

Your Aquaculture Technology and Service Partner P&L 2016 2015 2016 2015 2015

(MNOK)

Q4 Q4 YTD YTD Total OPERATING REVENUES 448,6 344,1 1 603,1 1 425,3 1 425,3 Operating costs ex depreciations 424,9 316,9 1 458,9 1 290,2 1 290,2 EBITDA 23,7 27,1 144,2 135,2 135,2 Depreciation and amortization 20,3 13,9 69,2 47,5 47,5 EBIT 3,4 13,2 75,0 87,7 87,7 Net interest expense

• 1,7
• 1,7
• 6,6
• 5,4
• 5,4

Other financial items

• 4,8
• 4,6
• 19,8
• 4,3
• 4,3

Net financial items

• 6,5
• 6,3
• 26,4
• 9,6
• 9,6

EBT

• 3,2

6,9 48,6 78,1 78,1 Taxes 4,9

• 0,8

21,0 19,7 19,7 NET PROFIT

• 8,1

7,6 27,6 58,4 58,4 Net profit (loss) attributable to: Non-controlling interests 0,6 0,4 0,9 1,6 1,6 Equity holders of AKVA group ASA

• 8,7

7,3 26,7 56,8 56,8

Revenue growth 30,4 % 12,8 % 12,5 % 14,4 % 14,4 % EBITDA margin 5,3 % 7,9 % 9,0 % 9,5 % 9,5 % EPS (NOK)

• 0,34

0,28 1,03 2,20 2,20

Financials – Detailed P & L

27

• 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, (49%) in Wise Blue AS and (34%) in Sperre AS

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Group financial profile – remains strong

Available cash Working capital

• Record low working capital level – despite record high activity
• Continued strong capital discipline in the Group
• Including a 90 MNOK credit facility in Danske Bank

144 147 157 226 160 230 203 256 165 4Q16 3Q16 2Q16 1Q16 4Q15 2Q15 1Q15 3Q15 4Q14 131 109 64 126 127 145 126 50 100 150 1 2 3 4 5 6 7 8 9 10 11 36 8,8% 10,8% 8,8% 4Q14 3Q15 4Q15 2Q15 1Q15 2Q16 1Q16 3Q16 2,2% 4Q16 137

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Group financial profile – remains strong, continued

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ROCE Equity

• One dividend paid in Q3 2016 of total 19.8 MNOK
• Excluding effect in AKVA group Denmark, the ROCE would be 13.5%

12,3 1Q16 14,7% 2Q16 4Q15 2Q15 15,2% 14,0% 12,4% 17,8% 3Q16 3Q15 13,9% 4Q14 1Q15 4Q16 10,7% 14,1% 452 437 460 435 428 443 403 398 50 100 150 200 250 300 350 400 450 500 5 10 15 20 25 30 35 40 45 37,1% 417 2Q15 4Q16 4Q14 4Q15 3Q15 42,8% 1Q15 1Q16 2Q16 3Q16 34,6% 39,6%

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Net debt/EBITDA of 1.5

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

212 213 172 71 136 98 76 82 1,5 1,4 1,1 1,0 0,8 0,9 50 100 150 200 250 0,35 0,70 1,05 1,40 1,75 0,7 0,5 0,8 3Q16 2Q16 1Q16 4Q15 4Q16 2Q15 89 1Q15 4Q14 3Q15 NIBD NIBD/EBITDA (12 mth rolling)

Net debt 30.09.2016 213 491 EBITDA

• 23 678

Income taxes paid 9 007 Net interest paid 1 728 Capex paid 24 728 Acquisitions / Divestments 83 754 Paid dividend

• Sale of fixed assets
• Currency effects
• 1 052

Other changes in working capital

• 95 646

Net change

• 1 159

Net debt 31.12.2016 212 332

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Cash flow statement

31 Strong cash flow improvement from operating activities due to capital discipline in the Group CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW 2016 2015 2016 2015

(NOK 1 000)

Q4 Q4 YTD YTD Net cash flow from operations 11 932 20 049 105 596 120 240 Net cash flow from change in w orking capital 95 646

• 11 836

106 050

• 24 500

Net cash flow from operational activities 107 578 8 212 211 645 95 740 Net cash flow from investment activities

• 123 326
• 6 379
• 260 324
• 116 557

Net cash flow from financial activities 52 070

• 29 380

105 646 74 419 Net change in cash and cash equivalents 36 323

• 27 546

56 967 53 602 Net foreign exchange differences 3 034 860

• 941

1 980 Cash and cash equivalents at the beginning of the period 126 187 136 203 109 517 53 935 Cash and cash equivalents at the end of the period 165 543 109 517 165 543 109 517

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Balance sheet

32

BALANCE SHEET 2016 2015 (MNOK) 31.12 31.12

ASSETS 1 307 1 083 Intangible non-current assets 506 361 Tangible non-current assets 151 103 Financial non-current assets 6 8 Inventory 186 181 Receivables 292 320 Cash and cash equivalents 166 110 LIABILITIES AND EQUITY 1 307 1 083 Equity 434 425 Minority interest 19 3 Long-term interest bearing debt 348 188 Short-term interest bearing debt 30 57 Non-interest bearing liabilities 477 409

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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 will be 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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CAPEX

34

Capex (TNOK) and capex / sales (%)

47 701 22 002 19 612

CAPEX breakdown 2016 YTD (TNOK) Ordinary Rental Intangible (R&D)

18 633 10 994 16 037 15 871 32 853 23 114 17 067 24 407 24 728 6% 3% 4% 4% 10% 6% 4% 7% 6% 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 Q4 - 2014 Q1 - 2015 Q2 - 2015 Q3 - 2015 Q4 - 2015 Q1 - 2016 Q2 - 2016 Q3 - 2016 Q4 - 2016

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Largest shareholders

35

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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 INVESTMENT GBR 1 000 621 3,9 % VERDIPAPIRFONDET ALFRED BERG NOR 489 417 1,9 % EIKA NORGE NOR 461 396 1,8 % STATOIL PENSJON NOR 391 920 1,5 % VPF NORDEA KAPITAL NOR 356 300 1,4 % MP PENSJON PK NOR 346 000 1,3 % NORRON SICAV - TARGET LUX 330 067 1,3 % VERDIPAPIRFONDET DNB NOR 300 000 1,2 % MERTOUN CAPITAL AS NOR 265 352 1,0 % VPF NORDEA AVKASTNING NOR 246 598 1,0 % FORTE TRØNDER NOR 238 692 0,9 % OLE MOLAUG EIENDOM AS NOR 193 924 0,8 % ARCTIC FUNDS PLC BEL 166 880 0,6 % ROGALAND SJØ AS NOR 150 000 0,6 % DAHLE BJØRN NOR 132 595 0,5 % NORDEA 1 SICAV GBR 124 108 0,5 % NORRON SICAV - SELECT LUX 122 382 0,5 % STATOIL FORSIKRING AS NOR 118 985 0,5 % VERDIPAPIRFONDET NOR NOR 22 538 342 87,2 % 20 largest shareholders 3 295 961 12,8 % Other 25 834 303 100,0 % Total number of shares as per 31.12.2016

No of shares % Origin No of shareholders

20 236 547 78,3 % Norway 1082 4 168 449 16,1 % Great Britain 24 551 345 2,1 % Luxembourg 5 243 967 0,9 % Belgium 7 211 674 0,8 % USA 9 422 321 1,6 % Other 76

Total number of shareholders: 1203 - 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 20 40 60 80 100 jan.16 feb.16 mar.16 apr.16 mai.16 jun.16 jul.16 aug.16 sep.16

• kt.16

nov.16 des.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 80 100 2012 2013 2014 2015 2016

Last 5 years

Trading volume

Share price

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Outlook – by CEO Hallvard Muri

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Order backlog and inflow

37

Order backlog Order intake

• Highest order backlog ever, 998 MNOK
• 41% of total order backlog relates to Land based technology (LBT)
• The strong market activity continues into Q1
• NOK 2.0 billion in order intake 2016
• In Q3 2015 the order backlog of Aquatec Solutions was included

for the first time (with MNOK 187)

414 385 468 586 LBT 283 LBT 437 LBT 417 LBT 412 200 400 600 800 1000 1200 1Q 2Q 3Q 4Q

MNOK

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

MNOK

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Outlook - Backdrop

38

• Biological condition remains challenging for core customers and thus focus on

productivity and efficiency

• New Chilean regulations
• Continued strong earnings and cash flow in the salmon industry

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Outlook – AKVA group

39

• Continued good activity in Nordic cage based segment
• UK and Chile increased activity and recovered from 2016
• Canada competitive market and moderate expectations
• In Export the Mediterranean represents upside potential and we will focus our

resources in this region over the next quarters

• Land Based segment – Very high activity level, key for AKVA group to be

selective and focus on project execution

• S&AS step up efforts in Nordic
• Improve current core – untapped potential
• Continue to evaluate opportunity for new products to fit in core business

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Q & A

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