Your Aquaculture Technology and Service Partner. Company presentation November 2014

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Beryl Harper
5 years ago
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1 Company presentation November 2014

2 Important Information About this Company Presentation This Company Presentation has been prepared by AKVA group ASA ("AKVA group" or the "Company") for information purposes only, and does not constitute investment advice or an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction to any person. Any recipient or reader of this Company Presentation contemplating to make an investment in the Company must rely on their own examination of the Issuer, including the merits and risks involved. Each recipient and reader of this Company Presentation should consult with its own legal, credit, business or tax adviser as to legal, credit, business and tax advice. By receiving or accessing this Company Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and are solely responsible for forming your own opinion of the potential future performance of the Company s business. The information contained in this Company Presentation has not been independently verified. No representation or warranty (express or implied) is made as to the accuracy or completeness of any information contained herein, or any oral information provided in connection therewith, and it should not be relied upon as such. The Company accepts no liability whatsoever arising directly or indirectly from the use of this Company Presentation. This Company Presentation is current as of 14 November Nothing herein shall create any implication that there has been no change in the affairs of AKVA group since such date. This Company Presentation contains forward-looking statements relating to the Company's business, the Company's prospects and other forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", "expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this Company Presentation, including assumptions, opinions and views of the Company or cited from third party sources, are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development.

3 AKVA Group highlights Undisputed #1 supplier of technology and services to the aquaculture sector Salmon farming is driven by high demand, high prices and increased technological sophistication New salmon farming growth to come from land-based and more exposed locations with higher technological requirements AKVA Group is well positioned for continued growth and margin improvement new dividend policy introduced in Q3

4 Agenda 1 Company 2 Market 3 Financials

5 AKVA group uniquely positioned for future growth The most recognized brand in aquaculture technology Leading technology solutions and service partner to the global aquaculture industry Global presence - subsidiaries in 8 countries 695 employees Market cap of NOK ~700m and net debt of NOK 44m Cage-based 80% of revenue 1) Land-based 12% of revenue 1) Software 8% of revenue 1) 3 Plastic and steel cages Infrastructure Feed systems, sensors and cameras Land-based facilities Land-based equipment Software Technology and farming services Notes: 1) YTD September 2014

1 Cage-based technology Overview of AKVA Group deliveries Comments Complete range of technologies to operate any cage based aquaculture system in sea and lakes Most technologies are in-house

6 1 Cage-based technology Overview of AKVA Group deliveries Comments Complete range of technologies to operate any cage based aquaculture system in sea and lakes Most technologies are in-house developed AKVA has partnerships on nets, mooring and larger boats Solution can be configured according to variation in customer needs Trend towards enlargement and complete system deliveries Complete site investment in developed salmon industry costs NOK 25-40m per site and is growing Delivery time for a complete site is 6-8 months Significant installed technology base foundation for ongoing buildup of technology services

2 Land-based technology Overview of AKVA Group deliveries Comments Complete range of technologies to operate land based aquaculture systems. Most technologies are in-house developed.

7 2 Land-based technology Overview of AKVA Group deliveries Comments Complete range of technologies to operate land based aquaculture systems. Most technologies are in-house developed. AKVA also holds installation capability Solutions can be configured according to variation in customer needs Trend towards enlargement and complete system deliveries Complete site investment in developed salmon industry range from NOK m for a complete facility. Farming technology constitutes 30-50% of total investment Delivery time for a complete site is 6-18 months Growing installed technology base foundation for ongoing buildup of technology services

8 3 Technology and farming services Illustration of technology and farming services Comments Building reoccurring technology services based on large installed technology base Utilizing size of AKVA and the most developed infrastructure established in all salmon producing regions. Service agreements secure entry to customers, revenues for reoccurring maintenance and upgrades as well as customer satisfaction Introduction of equipment rental bundled with services represents the next step in development, utilizing existing service infrastructure and shifting revenue streams from customer CAPEX to customer OPEX

4 Software Illustration of software offering Comments Clear #1 supplier of best of breed software for management, monitoring and control of fish farming operations (Fishtalk) as well as operational

9 4 Software Illustration of software offering Comments Clear #1 supplier of best of breed software for management, monitoring and control of fish farming operations (Fishtalk) as well as operational software running and automating farming operations (AKVA control and AKVAconnect). Clear #1 player in the salmon industry, however systems are applicable for multiple species Reoccurring business model licensing right to use prepaid. Pricing linked to volume of production and inflation Developing and launching new modules with similar revenue potentials and business model as existing modules in place.

10 Presence in all main farming regions Map of activities Revenue per region, 2014 YTD Export 9% Americas 19% Nordic Americas Export 72% Nordic

11 Strategic priority to increase the proportion of software and service-related revenue Illustration of delivery model Comments Introduction of rental business model in Norway. Already successfully introduced in UK and Canada Software and services 25% Rental is an all inclusive service providing for instance light or picture for an agreed period of time (2 to 5 years duration) - reduced CAPEX and reducing operational work from the customer Acquisition of Yes Maritime in 2014, a provider of diving, ROV and other services to the salmon farming sector (Farming services) 75% Technology Development of Farming Services still in an early stage opportunity for consolidation Aim of delivering more than 30% of revenue through software and services by developing software, farming services, technology services and rental further

12 AKVA group s values

13 AKVA Group serves all salmon farmers in the World Customer examples Revenue per customer YTD 2014 Customer 1 9% Customer 2 9% 6% Customer 3 Other 76%

40 years of history significant operational improvements undertaken in recent years 2014 1974 Plastic cages 1980s Feed system 1980s Steel cages 1990s International expansion 2000s Acquisitions

14 40 years of history significant operational improvements undertaken in recent years Plastic cages 1980s Feed system 1980s Steel cages 1990s International expansion 2000s Acquisitions Founder-driven growth 2006 Listed on OSE 2007 Acquisition of Maritech International 2007/2008 UNIAqua / Idema Aqua 2011 Share issue 2012 Sale of the Maritech operation in Norway 2013 Acquisition of Plastsveis AS Profitable growth 2014 Focus on: - Customer satisfaction - Profitable growth - Controlled cost - Sound financial position Acquisition of YesMaritime AS Introduction of new dividend policy

15 Agenda 1 Company 2 Market 3 Financials

16 Strong demand for salmon - analysts expect high and stable salmon prices going forward Annual harvest volumes of atlantic salmon Salmon price history and forecast, NOK/kg Million tonnes % Source: Notes: e Avg Fish Pool, broker research reports, Arctic Securities ) Average across actual prices in Jan-Oct and Fish Pool forward prices for Nov and Dec 2) Average across Fish Pool and 6 broker estimates 3) Average across 2 broker estimates others do not provide long-term forecasts e 1) 2015e 2) 2016e 2) Long-term 3)

Aquaculture is becoming increasingly technology-intensive Farming capex, NOK/kg harvested 1) Comparison of cage in 1980 to cage in 2014 +2.3x 3.7 1.

17 Aquaculture is becoming increasingly technology-intensive Farming capex, NOK/kg harvested 1) Comparison of cage in 1980 to cage in x Source: Notes: e Salmon farmer annual reports 1) Based on reported farming capex and harvest volumes for Marine Harvest, Salmar, Cermaq, Lerøy, Grieg, NRS and Bakkafrost, 2014 figures are based on company guidance

18 Increased regulation adds complexity to salmon farming Challenge Regulation AKVA Group solution Sea lice Proposal to reduce the regulatory limit from 0.5 sea lice per salmon to 0.1 Several initiatives in a comprehensive approach to solve the sea lice issue, including involvement in «lice tube» solution, development of exposed farm concepts as well as use of technologies to distract lice from fish farms Escapes Disease «Zero escape» vision for the salmon industry with rigid regulatory framework support as well as substantial fines Control and reduction of disease is key in all aquaculture operations, supported by increased rigidity and regulatory framework globally Development of more robust less risk exposed technological cage solutions as well as specialized netting solutions, such as ECOnet. ECOnet is based on PET materials developed as fencing technology in other industries, now being introduced to fish farming by AKVA group Development range of technical solutions, including land based technologies, reducing risk of disease as well as spreading of disease. Technologies enabling movement of industry from high density areas close to shore line towards more exposed sites key in strategy. Implying larger more robust solutions

19 Chile is normalising supportive of Chilean spending Chilean farming EBIT/kg, USD / kg WFE 1) AKVA Group Chile revenue, NOKm Q Q1-Q Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q Q1-Q3 Notes: 1) Based on Multiexport figures, one of the largest Chilean salmon farmers

20 Driving forces salmon industry LAND BASED FARMING The exponential challenge of the coastal zone EXPOSED SITES FARMING SHORELINE

Growth on land and in exposed areas will increase

increases production and reduces biological risk

High utilization of licenses in existing farming

Australia Exposed / offshore Ongoing trend

21 Growth on land and in exposed areas will increase technology requirements Land-based Larger smolt increases production and reduces biological risk Potential for full landbased grow-out Sheltered High utilization of licenses in existing farming regions New regions include Russia, Iceland and Australia Exposed / offshore Ongoing trend towards more exposed areas Offshore emerging as new segment

The growing movement to participate in the blue revolution Middle East: Offshore Saudi, Oman, Iran (Caspian) Lakes/Dams Iran Land Based UAE, Saudi, Oman, Iran Asia: Offshore Indonesia, Malaysia,

22 The growing movement to participate in the blue revolution Middle East: Offshore Saudi, Oman, Iran (Caspian) Lakes/Dams Iran Land Based UAE, Saudi, Oman, Iran Asia: Offshore Indonesia, Malaysia, Japan, South Korea, India, Sri Lanka Lakes/Dams China, Vietnam Land Based China, Thailand, Malaysia, Indonesia, Vietnam The progressive regions: Salmon Sea Bass & Sea Bream Other Species emerging regions Sub-Sahara Africa: Offshore Mauritius, Mozambique Lakes/Dams Lesotho, Ghana, SE Africa Land Based SE Africa

23 Continued growth expected in the aquaservice segment Cycle development Short-term growth drivers Mid-term growth drivers Cycle development Aquaservice Salmon farmers 45 new licenses granted in Norway in 2014 will amount to capex of approximately NOK 500m Rebound in the Chilean market Kontali expects 3% annual volume growth in salmon farming in Potential for additional price growth Additional growth from trend towards more exposed areas and land Additional growth from increased regulation Additional growth from other species Time

24 AKVA Group is the undisputed #1 technology and service provider to the aquaculture sector Cages Aquaculture machinery Water engineering Software & IT Service & 2013 revenue, Support NOKm AKVA Group is the 919m 325m undisputed #1 supplier to the aquaculture industry Complete offering increasingly seen as positive by customers 134m 301m 41m Scale provides technological advantage Holds the most wellknown brands in the industry Present in all main markets

25 Agenda 1 Company 2 Market 3 Financials

26 AKVA Group has seen revenue growth of 15% since 2012 AKVA Group revenue Comments Software +14% +40% Land-based Cage-based Growth in cage-based driven by increased activity in the Nordic-, Canadian-, and UK market. Growth in land based du to the acquisition of Plastsveis AS in April 2013 and increased activity in our recirculation business FY 1) 2013 FY 2013 Q1-Q Q1-Q3 Notes: 1) 2012 FY for software is excluding a one of gain of MNOK 29 related to the sale of the Norwegian Maritech business

27 Target of 10% near-term EBITDA margin further potential longer term AKVA Group EBITDA-margin across segments Comments 2012 FY 1) 2013 FY 2014 YTD Near-term target of 10% EBITDA margin 15% 20% 14% Land-based margins should increase due to restructuring of business including new management and new operational setup 3% 4% 10% 1% 4% 5% 10% AKVA Group margins set to increase with increasing mix of Software and Services -11% -3% Cage-based Land-based Software Group Notes: 1) 2012 FY for software is excluding a one of gain of MNOK 29 related to the sale of the Norwegian Maritech business

28 Operational leverage is a driver of increase in margin AKVA Group gross margin and SG&A 1) Figures in '000 NOK YTD 2014 YTD Revenue 802, , , ,012 COGS 587, , , ,752 Gross margin 214, , , ,260 GM in % 26.8 % 26.5 % 26.8 % 26.1 % SG&A 185, , , ,274 Comments Fixed cost base has been maintained at below NOK 200m since 2012, while revenue has increased significantly The number of FTE s decreased in 2013 due to cost focus and controlled reduction of exposure in Chile The number of FTE s has increased in 2014 due to the acquisition of Yes Maritime and increased activity in the Nordic market EBITDA 28,816 46,905 38,221 89,986 EBITDA in % 3.6 % 5.1 % 5.7 % 9.6 % # FTEs Notes: 1) 2012 FY is excluding a one of gain of MNOK 29 related to the sale of the Norwegian Maritech business

29 Order backlog is all-time high AKVA Group order backlog Comments NOKm The order backlog still include only a small portion of technology to 45 newly awarded licenses in Norway and several planned freshwater facilities Delivery time of backlog is 1 to 12 months with most of the delivery in the first six months Seasonal pattern of increasing backlog in Q4 and Q1 and decreasing backlog in Q2 and Q Q 2Q 3Q 4Q

30 Healthy balance sheet bank debt was refinanced in 2014 AKVA Group balance sheet BALANCE SHEET (MNOK) Intangible fixed assets 254,5 250,1 250,8 Fixed assets 65,2 51,7 55,0 Long-term financial assets 1,8 1,8 2,0 FIXED ASSETS 321,4 303,6 307,8 Stock 134,7 158,8 144,2 Trade receivables 222,4 153,7 155,5 Other receivables 60,4 34,3 56,1 Cash and cash equivalents 97,5 30,5 58,3 CURRENT ASSETS 515,0 377,3 414,2 TOTAL ASSETS 836,4 681,0 722,0 Equity attributable to equity holders of AKVA group 373,0 339,5 336,6 Non-controlling interests 1,9 2,3 2,3 TOTAL EQUITY 374,9 341,8 338,9 Comments Bank debt refinanced in January 2014 with improved terms and conditions All bank debt is now long term NOK 75m is a 5 years bullet NOK 66m is a 5 year serial loan AKVA Group also has a credit facility of NOK 90m, which is currently unused Other long term debt 2,5 1,5 0,9 Long-term interest bearing debt 125,8 60,4 55,0 LONG-TERM DEBT 128,2 62,0 55,9 Short-term interest bearing debt 15,7 77,6 77,8 Other current liabilities 317,6 199,5 249,4 SHORT-TERM DEBT 333,3 277,2 327,2 TOTAL EQUITY AND DEBT 836,4 681,0 722,0

31 Launch of dividend policy in AKVA group ASA The Company s main objective is to maximize the return on the investment made by its shareholders through both increased share prices and dividend payments Based on the financial performance and outlook for the company the Board propose to implement an active dividend policy for AKVA group ASA AKVA group ASA aims to pay out dividend twice every year, in Q2 and Q4 Proposed dividend to be paid out in Q is NOK 1.00 per share. This amounts to a total distribution of NOK 25,834,303 A two step policy: The dividend level shall reflect the present and expected future cash generating potential of AKVA group. AKVA group will target a net interestbearing debt/equity ratio of less than 0.5x When the target debt vs. equity level is met, at least 60% of the annual free cash flow after operational and financial commitments is intended to be distributed as dividend Applicable statutory restrictions shall be observed 31

32 AKVA Group highlights Undisputed #1 supplier of technology and services to the aquaculture sector Salmon farming is driven by high demand, high prices and increased technological sophistication New salmon farming growth to come from land-based and more exposed locations with higher technological requirements AKVA Group is well positioned for continued growth and margin improvement new dividend policy introduced in Q3

Your Aquaculture Technology and Service Partner. Company presentation August 2016

Your Aquaculture Technology and Service Partner. Company presentation August 2016 Company presentation August 2016 Important Information About this Company Presentation This Company Presentation has been prepared by AKVA group ASA ("AKVA group" or the "Company") for information purposes