INFORMATION MEMORANDUM

Transcription

1 INFORMATION MEMORANDUM AKVA group ASA (a public limited liability company organised under the laws of Norway) This Information Memorandum has been prepared in connection with the acquisition of Egersund Net AS The date of this Information Memorandum is 23 July 2018 NO SHARES OR OTHER SECURITIES ARE BEING OFFERED OR SOLD IN ANY JURISDICTION PURSUANT TO THIS INFORMATION MEMORANDUM

2 IMPORTANT INFORMATION This information memorandum (the "Information Memorandum") has been prepared in accordance with section 3.5 of Oslo Børs' Continuing Obligations for stock exchange listed companies (the "Continuing Obligations") in connection with the contemplated acquisition by AKVA group ASA ("AKVA" or the "Company", and together with its consolidated subsidiaries, the "Group") of all the issued and outstanding shares of Egersund Net AS (the "Transaction") pursuant to a transaction agreement entered into with Egersund Group AS and Egersund Net AS on 28 June It also serves as a prospectus equivalent document for the purpose of listing the consideration shares issued in connection with the Transaction, cf. section 75 no. 7 of the Norwegian Securities Trading Act. All references herein to "Egersund Net" refer to Egersund Net AS, and together with its subsidiaries, the "EN Group". All references to "Egersund Group" or the "Seller" refer to Egersund Group AS, and together with its subsidiaries, the "EG Group". No shares or other securities are being offered or sold in any jurisdiction pursuant to this Information Memorandum. This Information Memorandum was submitted to the Oslo Stock Exchange (the "Oslo Børs") for inspection before publication in accordance with section of the Continuing Obligations. This Information Memorandum is not a prospectus and has neither been inspected nor approved by the Norwegian Financial Supervisory Authority (No.: "Finanstilsynet") in accordance with the rules that apply to a prospectus, nor by any other supervisory or similar authority in any jurisdiction under such rules or any other rules or regulations. All inquiries relating to this Information Memorandum must be directed to the Company. No other person is authorized to give any information about, or to make any representations on behalf of the Company in connection with the Transaction. If any such information is given or made, it must not be relied upon as having been authorized by the Company. The information contained herein is as of the date hereof and is subject to change, completion and amendment without further notice. The delivery of this Information Memorandum shall not imply that there has been no change in the Company's affairs or that the information set forth herein is correct as of any date subsequent to the date hereof. The contents of this Information Memorandum are not to be construed as legal, business or tax advice. Each reader of this Information Memorandum should consult with their own legal, business or tax advisor as to legal, business or tax matters. If you are in any doubt about the contents of this Information Memorandum you should consult your stockbroker, bank manager, lawyer, accountant or other professional advisor. The distribution of this Information Memorandum in certain jurisdictions may be restricted by law. The Company requires persons in possession of this Information Memorandum to inform themselves about, and to observe, any such restrictions. No securities of the Company are being offered or sold pursuant to this Information Memorandum. This Information Memorandum does not constitute an offer to sell, or a solicitation of an offer to buy, any of the Company's previously issued shares or any other securities of the Company. The 7,500,000 shares of AKVA to be issued to Egersund Group (the "Consideration Shares") have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or with any securities regulatory authority of any state or other jurisdiction in the United States, and may not be offered or sold within the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with any applicable state securities laws. This Information Memorandum has not been approved nor reviewed by the U.S. Securities and Exchange Commission and is not for general distribution in the United States. 2

3 This Information Memorandum is subject to Norwegian law. Any dispute arising in respect of this Information Memorandum is subject to the exclusive jurisdiction of the Norwegian courts with Oslo District Court as legal venue in the first instance. Investing in the Company's shares involves risks. See section 1 "Risk factors" below. 3

4 TABLE OF CONTENTS 1 RISK FACTORS Risks related to the Transaction Risks related to the business of the Group Financial risks Risks related to the shares RESPONSIBILITY STATEMENT DESCRIPTION OF THE TRANSACTION Overview Background and significance of the Transaction to the Company The Seller The structure of the Transaction and timetable The Transaction Agreement Total consideration Agreements to the benefit of members of the board or management in AKVA, Egersund Group or Egersund Net PRESENTATION OF AKVA Introduction History of share capital Legal structure Business description History and development Trends Patents Board of directors, executive management and employees Corporate Governance Governmental, legal or arbitration proceedings Material contracts outside of the ordinary course of business Major shareholders Significant change HISTORICAL FINANCIAL INFORMATION FOR AKVA GROUP ASA Introduction Selected financial information Statutory auditor PRESENTATION OF EGERSUND NET Introduction Board of directors and executive management Employees Business of Egersund Net Governmental, legal or arbitration proceedings Material contracts outside of the ordinary course of business Financial information of Egersund Net and the EN Group UNAUDITED PRO FORMA FINANCIAL INFORMATION Transaction background Purpose of the Unaudited Pro Forma Financial Information Basis for preparation and accounting policies

5 7.4 Unaudited pro forma condensed combined income statement for the year ended 31 December Unaudited pro forma condensed combined statement of financial position as of 31 December Notes to the Unaudited Pro Forma Financial Information Independent Assurance Report on the Unaudited Pro Forma Financial Information CAPITAL RESOURCES Sources of cash flow Debt overview Working capital statement MARKET OVERVIEW General aquaculture market development The equipment and service market for aquaculture ADDITIONAL INFORMATION Documents on display Sources of industry and market data Cautionary note regarding forwardlooking statements Incorporation by reference DEFINITIONS AND GLOSSARY TERMS APPENDICES APPENDIX A INDEPENDENT PRACTITIONER'S ASSURANCE REPORT ON THE COMPILATION OF PROFORMA FINANCIAL INFORMATION APPENDIX B EGERSUND NET AS ANNUAL REPORT AND AUDITOR'S REPORT FOR

6 1 RISK FACTORS Investing in the Company involves inherent risks. Prospective investors should consider carefully, among other things, all of the information set forth in this Information Memorandum, and in particular, the specific risk factors set out below. An investment in the Company is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of the investment. If any of the risks described below materialise, individually or together with other circumstances, they may have a material adverse effect on the Company's business, operating results and financial condition, which may cause a decline in the value and trading price of the Shares that could result in a loss of all or part of any investment in the Shares. The order in which the risks are presented below is not intended to provide an indication of the likelihood of their occurrence nor of their severity or significance. The information in this section 1 is as of the date of this Information Memorandum. References to the "Group" in this section 1 refer to the group following completion of the acquisition of Egersund Net. The risk factors related to the business of AKVA are considered to comprise the risk factors related to the business of Egersund Net. 1.1 Risks related to the Transaction Shareholders of the Company will have reduced ownership and voting interest in AKVA and will exercise less influence over management of AKVA than previously held in respect of the Company If the contemplated Transaction is completed, including the issuance of the Consideration Shares to Egersund Group, Egersund Group's shareholding in AKVA will increase from approximately 51.1% to approximately 62.1%. The relative ownership and voting interest of other shareholders in AKVA will accordingly be reduced, and such shareholders will thus exercise less influence in the Company than prior to completion of the contemplated Transaction. If Egersund Net fails to obtain all required consents, approvals and waivers, third parties may terminate or alter existing contracts Egersund Net is party to agreements, some of which contain change of control provisions that may be triggered by the contemplated Transaction. If Egersund Net is unable to obtain any necessary waiver or consent, the operation of change of control provisions may cause the loss of significant contractual rights and benefits or may require the renegotiation of financing agreements and/or the payment of significant fees. Investors cannot be assured that Egersund Net will be able to negotiate new agreements on terms as favourable to it as those that are entered into, or at all. Failure to complete the contemplated Transaction could result in certain nonrecoverable costs, negatively affect the Company's ability to realize its strategic goals, and negatively impact the share price and the future business and financial results of the Company AKVA cannot give any assurance that any conditions precedent for completion of the contemplated Transaction will be satisfied. If the contemplated Transaction is not completed for any reason, the Company will be subject to several risks, including, but not limited to, the following: The Company would not realize any of the expected benefits of having completed the Transaction; 6

7 the current market price of the Company's shares may reflect a market assumption that the contemplated Transaction will occur. Failure to complete the contemplated Transaction could result in a negative perception by the stock market of the Company generally and a resulting decline in the market price of the Company's shares; and certain costs relating to the contemplated Transaction (such as legal, accounting and financial advisory fees) are payable by the Company irrespective of whether the contemplated Transaction is completed. The failure to integrate the operations of Egersund Net successfully and on a timely basis could affect the Group's revenues which may affect the Company's share price AKVA and Egersund Net expect certain benefits to arise from the contemplated Transaction, such as new growth opportunities, more complete and competitive product and service offerings, improved operational performance and cost savings. Achievement of these benefits will depend in part upon whether the operations and the personnel of Egersund Net can be integrated in an efficient and timely manner. If this integration process is not successful, the financial results of the Group could be adversely impacted. The challenges involved in this integration include the following: Retaining key employees; redeploying resources in different areas of operations to improve efficiency; minimizing the diversion of management attention from ongoing business concerns; and addressing possible differences in the business cultures, processes, controls, procedures and systems of the Company and Egersund Net The anticipated benefits from the contemplated Transaction may not be achieved The success of the contemplated Transaction will depend, in part, on the Company's ability to effectively pursue additional growth opportunities and achieve more complete and competitive product and service offerings, improved operational performance and cost savings. Even if AKVA is able to successfully combine the operations of the Company and Egersund Net, it may not be possible to realize the full benefits that the Company and Egersund Net currently expect to result from the contemplated Transaction, or to realize these benefits within the time frame that is currently expected. The benefits of the contemplated Transaction may be offset by operating losses relating to changes in market conditions, risks and uncertainties relating to the Company's prospects, an increase in operating or other costs, unanticipated difficulties and costs related to the integration, the impact of competition and other risk factors relating to the industry. Significant costs will be incurred in the course of the contemplated Transaction The Company expects to incur significant transactionrelated expenses related to the contemplated Transaction. Transactionrelated expenses include inter alia financial advisory, as well as legal and accounting fees and expenses. Moreover, for the first financial years following the contemplated Transaction, AKVA will incur expenses to integrate the operations of Egersund Net and may also incur additional unanticipated expenses in connection with the contemplated Transaction. In addition, AKVA may incur unanticipated costs and experience unforeseen difficulties related to the integration of the operations, information systems and personnel of Egersund Net. 1.2 Risks related to the business of the Group The Group's income and future development is to a considerable extent dependent on market prices for Atlantic farmed salmon and trout 7

8 The Group's financial position and future development depend to a considerable extent on the financial condition and business position of its key customers which again depends on the price of Atlantic farmed salmon and trout, which has historically been subject to substantial fluctuations. Atlantic farmed salmon and trout are both commodities, and the Company therefore assumes that the market price will continue to follow a cyclical pattern based on the balance between total supply and demand. The demand for Atlantic farmed salmon and trout is affected by a number of different factors, such as changes in customer preferences, changes in prices and volumes of substitute products and general economic conditions. There can be no assurance that the demand for farmed salmon and trout will not decrease in the future. Further, the total supply of farmed salmon and trout fluctuates strongly due to variations in factors such as smolt release, biology and seawater temperatures. Atlantic farmed salmon and trout are furthermore generally sold as a fresh commodity with limited time available between harvesting and consumption. The entrants of new producing nations or the issuance of new production licenses could result in a general overproduction in the industry. Longterm decreases in the price of Atlantic farmed salmon and trout may have a material adverse effect on the Group's customers, which in turn may have a material adverse effect on the business, financial condition, results of operations or cash flow of the Group. The Group may be affected by increased food safety issues and perceived health concerns Food safety issues and perceived health concerns may have a negative impact on the reputation of and demand for the products and services of the Group and for the products of the Group's customers. It is of critical importance to the Group's customers that their products are perceived as safe and healthy in all relevant markets. The food industry in general experiences increased customer awareness with respect to food safety and product quality, information and traceability. A failure by the Group or its customers to meet new and exacting market or governmental requirements may reduce the demand for their products which, in turn, may have a material adverse effect on the Group. Nongovernmental organisations, such as environmental organisations and animal rights groups, campaigning groups, research communities or others may direct negative publicity towards the fish farming industry. Negative media attention could raise consumer scares in relation to farmed Atlantic salmon and trout, which may result in declined demand for the products and services of the Group and the products of the Group's customers. Various perceived health concerns about the level of organic contaminants, cancercausing PCB (polychlorinated biphenyls) and dioxins in farmed Atlantic salmon and trout have attracted negative attention in the media in the past. New perceived health concerns or food safety issues relating to products offered by the Group's customers may arise in the future and affect their ability to market and distribute their products, which in turn could have a material adverse effect on the business, financial condition, results of operations or cash flow of the Group. Global political, economic and market conditions influence, and could negatively impact, the Group's business The Group's operations are affected by global political, economic and market conditions. A worldwide economic downturn could reduce the availability of liquidity and credit to fund business operations worldwide. This could adversely affect the operations of the Group's customers, suppliers and lenders which in turn could affect demand for the Group's products and services. In addition, an economic downturn could reduce demand for the Group's products and services negatively and impact the Group's activity levels and pricing of its products and services and thus adversely affect the Group's financial condition and results of operations. The Group's operations involves risk relating to the outbreak of parasites or diseases The operations of fish farming facilities of the Group's customers involve biological risks, such as outbreak of diseases, viruses, bacteria, parasites, algae blooms, jelly fish and other contaminants. If there is a disease outbreak, the Group's customers may incur substantial costs in the form of lost growth on biomass, accelerated harvesting, loss of quality of harvested fish and a subsequent period of reduced production capacity and loss of income, which in turn could have a material adverse effect on the business, financial condition, results of 8

9 operations or cash flow of the Group due to reduced investments in and spending on products and services provided by the Group and the potential financial distress of one or more of the Group's key customers. The Group's senior management team and key employees are important to the Group's continued success and the loss of one or more members of the senior management team or one or more of the key employees of the Group could have a material adverse effect on the Group's business The Group's performance is to a large extent dependent on highly qualified personnel and management, and the Group's continued ability to compete effectively, implement its strategy and further develop it business depends on its ability to attract new and well qualified employees and retain and motivate existing employees, making it important that the Group is able to implement actions and offer a business model that continues to motivate existing and valuable employees, as well as attract new talents. Any loss of the services of key employees, particularly to competitors, or the inability to attract and retain highly skilled personnel could have a material adverse effect on the Group's business, results of operation, financial condition and/or prospects. The Group may not be able to successfully anticipate, manage or adopt technological changes within the aquaculture and fish farming industry and could be adversely affected if it fails to keep pace with technological changes The Group may be unsuccessful in anticipating, managing or adopting technological changes within the aquaculture and fish farming industry on a timely basis, which could reduce profitability or disrupt operations and harm the Group's business. In addition, the Group's future growth and development may require additional investment in technological systems. The Group depends on having the investment capital resources necessary to invest in new technologies to optimize and streamline its products and services with respect to both cage farming and land based fish farming facilities. Nevertheless, the Group may not have adequate capital resources available when it needs to make such investments, which could result in a material adverse effect on the Group's business, results of operations, financial condition and/or prospects. The Group is exposed to significant reputational risk Negative publicity related to the Group and/or its customers could, regardless of its truthfulness, adversely affect its reputation and goodwill. The Group is through its customers exposed to the risk that negative publicity may arise from activities of legislators, pressure groups and the media, for instance that fish and other commodities are being bred only to generate profit, which may tarnish the industry's reputation in the market. Negative reputational publicity may arise from a broad variety of causes, including incidents and occurrences outside the Group's, and the Group's customers', control. No assurance can be given that such incidents will not occur in the future, which may cause negative publicity about the operations of the Group's customers and their reputation, which in turn could have a material adverse effect on the Group. Negative publicity could further jeopardize the Group's existing relationships with customers and suppliers or diminish the Group's attractiveness as a potential investment opportunity. In addition, negative publicity could cause customers to purchase products from the competitors of the Group's customers, i.e. decrease the demand for the customers' products. Occurrence of any of these actions could impact the Group's customers' ability to export their products and may in turn have a material adverse effect on the Group's business, results of operations, financial condition and/or prospects. The Group operates in a global market and there is no guarantee that the Group will be successful in its future business operations The Group operates in a global industry, which faces the Group with competition from both international and local competitors. The Group competes on the basis of product and service quality, prices, reputation, relationship, industry experience and performance. Other businesses may develop competitive advantages that the Group cannot match, which may reduce the Group's access to and success in competitive sales processes for 9

10 its products and services. The Group's current and new competitors may have or may in the future develop substantially improved operational or technical methods, personnel or procedures to offer lower prices for high quality products and services, more efficient operating structures, greater adaptability to changing market needs and more established relationships with customers. There can be no assurance that the Group will be able to respond to existing as well as new sources of competition. Furthermore, there can be no assurance that the Group will be able to offer competitive prices and competitive quality of its products and services, nor that it will be able to maintain its strong position and status in the aquaculture market. If the Group is less successful than its competitors to develop and maintain or expand its business or adapt to changing market needs, or if the Group's competitors are able to offer products or services of similar or higher quality at a lower cost for the customers, the Group may be unable to distribute its products and services at prices it deems appropriate in order to operate profitably. Any inability to compete effectively may have a material adverse effect on the Group's business, results of operations, financial condition and/or prospects. A general trend in the aquaculture industry is that the customers take control over larger part of the value chain (e.g. transport of fish). This trend can also become applicable for the supply of equipment and services, which could lead to both reduced demand for the Group's products and services and increased competition in the market. Another trend is the regime with development licenses where entirely new types of equipment is introduced and tested through trials. These production technologies are quite different from the standard commercialized equipment used today, and if one or more of these trials are successful, this may lead to market disruption and a reduced demand for the Groups products. In addition, new production technologies can lead to other countries being able to produce salmon and rainbow trout, and the geographical/biological advantage that the Group's customers has today, may disappear. The same risk applies to the increased focus on land based production. The Group is exposed to risk in connection with defective products and other quality issues The Group is dependent on maintaining a high quality standard for its products and services. Defects in the functioning or reliability of products supplied by the Group may expose the Group to claims and liability towards customers, as well as reputational and other market risks, which may adversely impact the business, financial condition, results of operations or cash flow of the Group. The Group is exposed to risk in connection with manufacturing capacity and reliability The Group is dependent on maintaining a sufficient production and design capacity and capability to fulfil existing orders and meet future demand from its customers. Any constraints in manufacturing capacity and capability due to operational limitations, defective or outdated machinery, faulty maintenance, faulty planning or constraints in transportation and distribution may adversely impact the business, financial condition, results of operations or cash flow of the Group. The Group is furthermore dependent on timely and complete deliveries from its suppliers meeting the Group's quality requirements to fulfil its obligations towards its customers, and any similar constraints that would apply to its suppliers may also adversely affect the Group. The Group is exposed to risk in connection with raw materials and certain components The Group is exposed to fluctuations in prices of certain raw materials used for some main products. Reduction of this risk is sought through general awareness and specific attention during major contract periods, as well as by securing the pricing of raw materials immediately after signing contracts when applicable. The main raw materials that would affect the Groups financials is related to steel used in production of steel cages and barges, and PE (Polyethylene) used in production of plastic cages, pipes and boats. The Group is exposed to weather condition and climate risk 10

11 The rate at which Atlantic farmed salmon and trout grows depends, among other things, on weather conditions. Unexpected warm or cold temperatures and altered oxygen levels in the sea resulting from annual variations can have a shortterm, but significant negative impact on the business of the Group's customers with respect to growth rates and feed consumption. Extreme weather conditions along the coastlines, such as storms or floods, could lead to incidents of fish escape, loss of biomass, lost feeding days and repair costs relating to damage on the customers' facilities. The frequency of extreme weather conditions has increased over the last years. Over time, rising ocean temperatures and ocean acidification resulting from climate changes may have a detrimental effect on the aquaculture industry and necessitate relocation of operations. Annual variations in weather and extreme weather conditions may have a material adverse effect on the Group's customers, which in turn may have a material adverse effect on the business, financial condition, results of operations or cash flow of the Group. The Group's insurance coverage may become more expensive and may be inadequate to cover the Group's losses The Group's insurance coverage is subject to certain significant deductibles and levels of selfinsurance, does not cover all types of losses and, in some situations, may not provide full coverage for losses or liabilities resulting from the Group's operations. In addition, the Group is likely to continue experiencing increased costs for available insurance coverage, which may impose higher deductibles and limit maximum aggregated recoveries. Insurers may not continue to offer the type and level of coverage that the Group currently maintains, and its costs may increase substantially as a result of increased premiums, potentially to the point where coverage is not available on economically manageable terms. Should liability limits be increased via legislative or regulatory action, it is possible that the Group may not be able to insure certain activities to a desirable level. If liability limits are increased and/or the insurance market becomes more restricted, the Group's business, financial condition and results of operations could be materially adversely affected. Moreover, the Group may not be able to maintain adequate insurance in the future at rates management considers reasonable or be able to obtain insurance against certain risks. The Group's operations are directly and indirectly subject to extensive industry regulation The Group's activities are directly and indirectly subject to extensive international and national regulations, in particular relating to environmental protection (including wild salmon protection), food safety, hygiene and animal welfare. In Norway, the government has introduced a new regime with production zones and regulation of production capacity based on the industry's impact on wild salmon due to sea lice levels. There is a risk that the entire production capacity will be reduced due to this, with a subsequent reduction in demand for the Group's products. Changes in laws, regulations and concessions may have a material adverse effect on the business, financial condition, results of operations or cash flow of the Group's customers and of the Group. The authorities may introduce further regulations for the operations of aquaculture facilities, such as enhanced standards of production facilities, capacity requirements, feed quotas, fish density, site allocation conditions or other parameters for production, which may have an effect on the Group directly, or through its customers. Furthermore, authorities may impose stricter environmental requirements upon fish farming, e.g. restrictions or a ban on discharges of waste substances from the production facilities, stricter requirements to prevent fish escapes and new requirements regarding animal welfare. Investments necessary to meet new regulatory requirements could be significant and expensive for the Group or its customers. Legislation and guidelines with tougher requirements are expected and may imply higher costs for the food industry, and limitations on additives and use of medical products in the farmed fish industry may be imposed, which may negatively affect the Group's customers. In addition, increased quality demands from authorities in the future relating to the food safety may also have a material adverse effect on the Group's customers. Such factors may in turn have a material adverse effect on the business, financial condition, results of operations or cash flow of the Group. 11

12 Compliance with, and breach of, the complex laws and regulations governing international trade could be costly; expose the Group to liability and adversely affect the Group's operations The Group's business is affected by laws and regulations in the geographical areas in which the Group operates, and the Group may be exposed to political and other uncertainties, including risks of importexport quotas, wage and price controls and the imposition of trade sanctions, embargoes and other trade barriers. Accordingly, the Group is directly affected by the adoption of laws and regulations and decisions in international bodies and may be required to make significant capital expenditures or operational changes to comply with such laws, regulations and decisions. It is also possible that such laws, regulations and decisions may add significantly to the Group's operating costs or significantly limit its export activities. Many countries control the export and reexport of certain goods, services and technology and impose related export recordkeeping and reporting obligations. The laws and regulations concerning export recordkeeping and reporting; export control and economic sanctions are complex and constantly changing. These laws and regulations may be enacted, amended, enforced or interpreted in a manner materially impacting the Group's operations. Products and services can be denied export or entry for a variety of reasons, some of which are outside the Group's control. Any failure to comply with applicable trade sanctions and restrictions could also result in criminal and civil penalties and sanctions, such as fines and loss of import and export privileges. Contractual risks All or a considerable portion of the Group's income is dependent on contracts with its customers. The Group may not be able to renew or obtain new and favourable contracts when the existing contracts expire, which could materially adversely affect the Group's results of operations, cash flows and financial condition. The Group's result of operations and cash flows could be materially adversely affected if any of its customers fails to compensate the Group for its products or services, terminates contracts with or without cause or fails to renew the existing contracts, and the Group is unable to enter into contracts with new customers at comparable price terms or at all. Furthermore, the Group's ability to extend or renew contracts, or to obtain new contracts, will depend on the prevailing market conditions. In cases where the Group is not able to obtain new contracts in direct continuation, or where new contracts are entered into on price terms substantially below the existing price terms or on less favourable terms compared to existing contract terms, the Group's result of operations, cash flow and financial conditions could be materially adversely affected. There can furthermore be no assurance that the Group's contracts are made on terms that ensure that the Company is fully compensated for the cost of producing and delivering the products and services to be provided under such contracts, or that the contracts are made on terms with appropriate limitations in the liability of the relevant member of the Group. The Group relies on IT systems and is exposed to the risk of failure or inadequacy in these systems The Group's ability to conduct its business may be adversely impacted by a disruption in the IT systems that support the business of the Group, some of which are beyond the Group's control. Any failure, inadequacy, interruption or security failure of those systems, or the failure to seamlessly maintain, upgrade or introduce new systems, could harm the Group's ability to effectively operate its business and increase its expenses. These risks may in turn have a material adverse effect on the Group's financial condition and results of operations. The Group's failure to comply with antibribery laws may have a negative impact on its ongoing operations The Group may operate in countries known to experience governmental corruption. While the Group is committed to conducting business in a legal and ethical manner, there is a risk that its employees or agents or those of its affiliates may take actions that violate legislation promulgated by a number of countries pursuant to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business 12

13 Transactions or other applicable anticorruption regulations which generally prohibit companies and their intermediaries from making improper payments to government officials for the purpose of obtaining or retaining business. Any failure to comply with the antibribery laws could subject the Group to fines, sanctions and other penalties against it which could have a material adverse impact on the Group's business, financial condition and results of operations. The Group may become subject to litigation The operating hazards inherent in the Group's business increase the Group's exposure to litigation, which may involve, among other things, contract disputes, personal injury, environmental, employment, intellectual property litigation, tax and securities litigation, and litigation that arises in the ordinary course of business. Any litigation may have a material adverse effect on the Group because of potential negative outcomes, the costs associated with defending the lawsuits, the diversion of the Group's management's resources and other factors. Employee and customer labour problems could adversely affect the Group A prolonged strike, work stoppage or other slowdown by the Group's employees or by the employees of the Group's suppliers or customers could cause the Group to experience a disruption of its operations, which could adversely affect the Group's business, financial condition and results of operations. The Group's business depends upon its ability to obtain specialized equipment and parts from third party suppliers The Group purchases specialized equipment and parts from third party suppliers and affiliates. Should the Group's current suppliers be unable or unwilling to provide the necessary equipment and parts or otherwise fail to deliver the products timely and in the quantities required, any resulting delays in the delivery of the Group's products and services could have a material adverse effect on the Group's business, financial condition, results of operations and cash flows. In addition, future price increases for this type of equipment and parts could negatively impact the Group's ability to purchase new equipment or to timely repair existing equipment. The Group may be subject to litigation if another party claims that the Group has infringed upon its intellectual property rights Third parties could assert that the tools, techniques, methodologies, programs and components the Group uses to provide its products and services infringe upon the intellectual property rights of others. Infringement claims generally result in significant legal and other costs and may distract management from running the Group's core business. Additionally, if any of these claims were to be successful, developing noninfringing technologies and/or making royalty payments under licenses from third parties, if available, would increase the Group's costs. If a license were not available, the Group might not be able to continue to provide a particular service or product, which could adversely affect the Group's financial condition, results of operations and cash flows. The Group's tax liabilities could increase as a result of adverse tax audits, inquiries or settlements The Group's operations may become subject to audit, inquiry and possible reassessment by different tax authorities. In accordance with applicable accounting rules relating to contingencies, management provides for taxes in the amounts that it considers probable of being payable as a result of these audits and for which a reasonable estimate may be made. Management also separately considers if taxes payable in relation to filings not yet subject to audit may be higher than the amounts stated in the Group's filed tax return, and makes additional provisions for probable risks if appropriate. As forecasting the ultimate outcome includes some uncertainty, the risk exists that adjustments will be recognized to the Group's tax provisions in later years as and when these and other matters are finalized with the appropriate tax authorities. 13

14 Cyberattacks could adversely affect the Group's business The Group's operations are subject to the risk of cyberattacks. If the Group's systems for protecting against cybersecurity risks are circumvented or breached, this could result in the loss of the Group's intellectual property or other proprietary information, including customer data, and disruption of its business operations, which could adversely affect the Group's financial condition and results of operation. 1.3 Financial risks The Group may be dependent on new funding from investors and/or banks to finance its operations going forward, and no assurance can be given that sufficient capital will be obtained, or the terms at which such capital can be obtained (if any) or with respect to the amount of capital that will be required The Group's business is capital intensive and, to the extent the Group does not generate sufficient cash from operations, the Company or its subsidiaries may need to raise additional funds through public or private debt or equity financing to finance its operations and to fund capital expenditures. Adequate sources of capital funding may not be available when needed or may not be available on favourable terms. If the Company raises additional funds by issuing additional shares or other securities, the holdings of existing shareholders may be diluted. If funding is insufficient at any time in the future, the Company may be unable to fund maintenance requirements and acquisitions, take advantage of business opportunities or respond to competitive pressures, any of which could adversely impact the Group's business, financial condition and results of operations. Moreover, the Group's loan agreements impose restrictions on the ability of the Group to incur further financial indebtedness, and accordingly, no assurance can be given that sufficient capital will be obtained if and when needed. The Group's financing agreements include terms, conditions and covenants that impose restrictions on the operations of the Group. A failure to comply with the conditions and covenants may have a material and adverse effect on the Group If the Group is unable to comply with the restrictions and covenants in the agreements governing its indebtedness, there could be a default under the terms of those agreements. The Group's ability to comply with these restrictions and covenants, including meeting financial ratios and measures, is, inter alia, dependent on the future performance of the Company (and its subsidiaries) and may be affected by events beyond its control. If a default occurs under these agreements (or any of them), lenders could unless such default is repaired terminate their commitments to lend and/or accelerate the outstanding loans and declare all amounts borrowed as due and payable. If any of these events occur, the Company cannot guarantee that its assets will be sufficient to repay in full all of its outstanding indebtedness, and the Company may be unable to find alternative financing. Even if the Company could obtain alternative financing, that financing might not be on terms that are favourable or acceptable to the Company. The Group is exposed to changes in interest rates and exchange rates, which may materially adversely affect the Group's cash flows and financial condition The Group has incurred, and may in the future incur, significant amounts of debt. The Group's interest bearing debt is based on a floating interest rate which implies that interest payments over time will fluctuate according to the changes in the interest rate level. The major part of the interest bearing debt is in NOK. To reduce the interest rate risk it is the strategy of the Group to have a balanced mix between equity and debt financing versus the 14

15 market risk in its industry. Movements in interest rates could therefore have certain effects on the Group's cash flow and financial condition. Further, fluctuations in currency exchange rates may have a material impact on the Group's financial performance. The Company is exposed to foreign exchange rate risk in particular in relation to American dollars (USD), Australian dollars (AUD), Danish kroner (DKK), Chilean peso (CLP), Canadian dollars (CAD), Turkish lira (TRY), Euro (EUR), Icelandic krona (ISK) and British pound (GBP). Foreign currency loans and forward exchange contracts/options are used to reduce the currency risk associated with cash flows in foreign currencies. Depending on area of operation, the Group may experience currency exchange losses when the Group does not hedge an exposure to a foreign currency. 1.4 Risks related to the shares Fluctuation of market value of shares The price and the performance of the shares of the Company could fluctuate significantly, inter alia, in response to quarterly variations in operating results, general economic outlook, adverse business developments, interest rate changes, changes in financial estimates by securities analysts, matters announced in respect of competitors or changes to the regulatory environment in which the Company operates. Market conditions may affect the Shares regardless of the Group's operating performance or the overall performance in the industry. Accordingly, the market price of the Shares may not reflect the underlying value of the Group's net assets, and the price at which investors may dispose of their Shares at any point in time may be influenced by a number of factors, only some of which may pertain to the Company, while others of which may be outside the Company's control. Additional capital requirements The Company may require additional capital in the future to finance its business activities or to take advantage of business opportunities. Upon the Company issuing shares to raise additional capital, such issuance may have a dilutive effect on the ownership interest of the then existing shareholders that choose not to participate in such issues. Furthermore, shareholders may be unable to participate in future offerings, where the shareholder's preemptive rights have been deviated from in order to raise equity on short notice in the investor market, or for reasons relating to foreign securities laws or other factors, and as such have their shareholdings diluted. Future share issues and sales of shares by major shareholders Future share issues and major sales of shares by major shareholders could have an adverse effect on the market price of the Company's outstanding shares. Such sales could also make it more difficult for the Company to offer equity securities in the future at a time and at a price that are deemed appropriate. There may not be a liquid market for the Shares Active, liquid trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors. If there proves to be no active trading market for the Shares, the price of the Shares may be more volatile and it may be more difficult to complete a buy or sell order for Shares. Even if there is an active public trading market, there may be little or no market demand for the Shares, making it difficult or impossible to resell the shares, which would have an adverse effect on the resale price, if any, of the Shares. Furthermore, there can be no assurance that the Company will maintain its listing on Oslo Børs. A delisting from Oslo Børs would make it more difficult for shareholders to sell their Shares and could have a negative impact on the market value of the Shares. Preemptive rights may not be available to U.S. holders and certain other foreign holders of the Shares 15

16 U.S. holders of the Shares may not be able to trade or exercise preemptive rights for new Shares unless a registration statement under the U.S. Securities Act is effective with respect to such rights or an exemption from the registration requirements of the U.S. Securities Act is available. The Company is not a registrant under the U.S. securities laws. If U.S. holders of the Shares are not able to trade or exercise preemptive rights granted in respect of their Shares in any rights offering by the Company, then they may not receive the economic benefit of such rights. In addition, their proportional ownership interests in the Company will be diluted. Similar restrictions may apply to other foreign holders of Shares. Holders of Shares that are registered in a nominee account may not be able to exercise voting rights as readily as shareholders whose Shares are registered in their own names with the Norwegian Central Securities Depository Beneficial owners of the Company's Shares that are registered in a nominee account (e.g., through brokers, dealers or other third parties) may not be able to vote for such Shares unless their ownership is reregistered in their names with the VPS prior to the Company's general meetings. The Company cannot guarantee that beneficial owners of the Company's Shares will receive the notice for a general meeting in time to instruct their nominees to either effect a reregistration of their Shares or otherwise vote for their Shares in the manner desired by such beneficial owners. The transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions The Company has not registered the Shares under the U.S. Securities Act or the securities laws of other jurisdictions than Norway, and the Company does not expect to do so in the future. The Shares may not be offered or sold in the United States, nor may they be offered or sold in any other jurisdiction in which the registration of the Shares is required but has not taken place, unless an exemption from the applicable registration requirement is available, or the offer or sale of the Shares occurs in connection with a transaction that is not subject to these provisions. In addition, there can be no assurances that shareholders residing or domiciled in the United States will be able to participate in future capital increases or exercise subscription rights. 16

17 2 RESPONSIBILITY STATEMENT The Board of Directors of AKVA group ASA accepts responsibility for the information contained in this Information Memorandum. We, the members of the Board of Directors of AKVA group ASA, hereby confirm that, having taken all reasonable care to ensure that such is the case, the information contained in this Information Memorandum is, to the best of our knowledge, in accordance with the facts and contain no omissions likely to affect its import. 23 July 2018 The Board of Directors of AKVA group ASA Hans Kristian Mong Chairman Anne Breiby Deputy Chairperson Frode Teigen Board member Evy Vikene Board member Anthony James Board member Tore Obrestad Employee's elected board member Carina Jensen Employee's elected board member Henrik A. Schultz Employee's elected board member 17

18 3 DESCRIPTION OF THE TRANSACTION 3.1 Overview On 28 June 2018, the Company entered into a transaction agreement with Egersund Group AS ("Egersund Group" or the "Seller") and Egersund Net AS ("Egersund Net") (the "Transaction Agreement") under which AKVA, subject to the terms and conditions of the Transaction Agreement, shall acquire all issued and outstanding shares of Egersund Net (the "EN Shares") from Egersund Group based on an enterprise value of Egersund Net of NOK 742,256,000, subject to customary net debt and working capital adjustments to reach the final equity value of the transaction (the "Transaction"). The Transaction is expected to be completed on or about 31 August The parties have also agreed that the EN Group, prior to the completion of the Transaction, shall separate out its material owned properties to Egersund Group and lease them back on terms and conditions agreed among the parties. For further information, see section "PreCompletion Transactions". In the event of a sale by Egersund Net of 33% of the shares in Atlantis Subsea Farming AS (see section below) (the "Atlantis Shares") after completion of the Transaction, it has been agreed that Egersund Group shall share in any gain or loss. The gain or loss shall be calculated net of any ownership costs, investments, capex, opex and financing costs etc. incurred in relation to the Atlantis Shares after completion of the Transaction. 3.2 Background and significance of the Transaction to the Company The acquisition of Egersund Net represents an important strategic development for AKVA, as Egersund Net complements AKVA's product and service offering, by adding nets and moorings to the portfolio. Following completion of the Transaction, AKVA will be able to serve its customers more efficiently and develop the most optimal solutions for the complete product and life cycle of fish farming as a more complete technology and service supplier with strengthened geographical presence. Furthermore, Egersund Net's technology, products and expertize will be given access to a wider geographical area through the Company's global presence and distribution channels. The combined force within technology and development will accelerate the work towards delivering efficient and costeffective solutions for the aquaculture industry, ensuring both optimal fish welfare and the highest levels of productivity. AKVA expects significant synergies, mainly within sales, both in the Nordic and in export markets following completion of the Transaction. 3.3 The Seller The Seller of the shares in Egersund Net, is Egersund Group AS, a private limited liability company incorporated under Norwegian law with business registration number and registered address at Svanavågen, NO4374 Egersund, Norway. Prior to completion of the Transaction, Egersund Group owns all issued and outstanding shares in Egersund Net, as well as approximately 51.1% of the Shares in AKVA. After completion of the Transaction, including the issuance of the Consideration Shares to Egersund Group, Egersund Group's shareholding in AKVA will increase to approximately 62.1%. 3.4 The structure of the Transaction and timetable The Transaction is an acquisition by AKVA of all issued and outstanding shares in Egersund Net from Egersund Group against consideration partly in cash (29.3%) and partly by way of the Seller Credit to be converted into the Consideration Shares (70.7%). Please see below a tentative time table for the Transaction: Date Event 15 May 2018 Signing of a letter of intent by AKVA and Egersund Group for the acquisition of Egersund Net 18

19 28 June 2018 Signing of the Transaction Agreement On or about 14 August 2018 Conditional resolution by the extraordinary general meeting of the Company to issue the Consideration Shares On or about 31 August 2018 Expected completion of the Transaction and issuance of the Consideration Shares On or about 3 September 2018 Expected first day of listing of the Consideration Shares on Oslo Børs 31 December 2018 Long Stop Date 3.5 The Transaction Agreement The following items describe certain special conditions and terms contained in the Transaction Agreement Completion conditions Completion of the Transaction is subject to satisfaction or waiver of customary completion conditions, including: (i) The extraordinary general meeting of AKVA to be held on 14 August 2018 having approved the Transaction Agreement and the issuance of the Consideration Shares to Egersund Group; (ii) the parties not being in material breach of their obligations under the Transaction Agreement at the time of completion; (iii) Egersund Net having conducted its business in the ordinary course and no material adverse change having occurred since 31 December 2017; (iv) the PreCompletion Transactions (see section below) having been completed on terms satisfactory to AKVA in its reasonable opinion; (v) lease contracts for certain specified properties having been entered into with the EN Group companies on terms satisfactory to AKVA in its reasonable opinion; (vi) Egersund Group and/or Egersund Net having obtained the necessary written thirdparty consents to the Transaction; and (vii) Egersund Group having converted the Seller Credit by subscribing for the Consideration Shares in a separate subscription form and signing a declaration of setoff of the Seller Credit against the subscription amount for the Consideration Shares PreCompletion Transactions The PreCompletion Transactions involve that Egersund Group shall procure a transfer from the EN Group to the EG Group of the following assets prior to, and as a condition for, completion of the Transaction: (i) Certain properties held by the EN Group in Kristiansund, Austevoll, Brønnøysund, Radøy (Manger), and, after completion of the Transaction, certain properties held by the EN Group in Tauragé, Lithuania; (ii) 99% of the shares in Egersund Garymenkul LTD, a Turkish limited liability company with business registration number ("mersis no.") ; (iii) 50% of the shares in Egersund Rørvik Eiendom AS, a Norwegian limited liability company with business registration number ; and 19

20 (iv) 100% of the shares in Egersund Trading Eiendom AS Purchaser undertakings In the event of a sale by Egersund Net of 33% of the shares in Atlantis Subsea Farming AS (see section below) after completion of the Transaction, it has been agreed that Egersund Group shall share in any gain or loss. The gain or loss shall be calculated net of any ownership costs, investments, capex, opex and financing costs etc. incurred in relation to the Atlantis Shares after completion of the Transaction Representations and warranties The Transaction Agreement contains customary representation, warranties and indemnities from Egersund Group related to title to the shares, legal capacity to enter into the agreement and the business of Egersund Net Termination of the agreement The Transaction Agreement may be terminated at any time prior to completion of the Transaction by written agreement between the parties, or by written notice from a party to the other party where the completion conditions have not been satisfied (for whatever reason except for the fault or breach of the Transaction Agreement of the party seeking to terminate the agreement) or waived prior to the Long Stop Date Fees and expenses Except as otherwise expressly provided in the Transaction Agreement, AKVA, Egersund Group and Egersund Net shall each carry the costs and expenses incurred by it in connection with the preparation, execution and performance of the Transaction Agreement and the Transaction, including all fees and expenses of advisors, representatives, counsel and accountants Seller undertakings/restrictive covenants Egersund Group shall not, and shall procure that its affiliates do not, for a period of 24 months from completion of the Transaction: (i) induce or attempt to induce any key employees to leave their employment with any EN Group company, provided that this shall not prevent Egersund Group or any of its affiliates from carrying out general solicitations for employment through public advertisements which are not specifically targeted at any such key employee, or from employing any such key employee who without solicitation initiates contact with Egersund Group or its affiliates seeking employment or other engagement; (ii) engage, or own shares, in any business which competes with the business of any EN Group company in the European Economic Area, provided that this shall not restrict Egersund Group or its affiliates from owning shares in any company listed on any regulated market which do not represent more than 5% of the issued share capital of such company; or (iii) induce or attempt to induce any supplier or customer of a EN Group company to cease to supply, offtake or cooperate, or to restrict or vary the terms of supply, offtake or cooperation, to, from or with such EN Group company. 3.6 Total consideration The consideration to be paid by AKVA to Egersund Group for the EN Shares is based on an enterprise value of NOK 742,256,000. The enterprise value will be subject to customary net debt and working capital adjustments to reach the final equity value of the Transaction (the "Consideration"). 20

21 The Transaction will be settled as follows: a) Egersund Group shall transfer 350 EN Shares (constituting 70% of the share capital of Egersund Net on a fully diluted basis) to AKVA against Egersund Group granting AKVA a seller credit in the amount of NOK 525,000,000, representing 70.7% of the Consideration (the "Seller Credit"); b) Egersund Group shall transfer 150 EN Shares (constituting 30% of the share capital of Egersund Net on a fully diluted basis) against a cash payment by AKVA representing 29.3% of the Consideration (the "Cash Consideration"); and c) a conversion of the Seller Credit by the issuance of 7,500,000 new shares in AKVA at a subscription price of NOK 70 per share, as full and final settlement thereof (the "Consideration Shares"). The Cash Consideration will be funded by existing short term credit facilities. The EN Shares will be transferred from Egersund Group to AKVA together with all rights attaching to them, free and clear of any encumbrances. The conditional resolution by AKVA's extraordinary general meeting to issue the Consideration Shares will be made on or about 14 August Egersund Group shall subscribe for the Consideration Shares in a separate subscription form on completion of the Transaction; expected to take place on or about 31 August The Consideration Shares will be registered in the VPS shortly thereafter under the Company's ordinary ISIN NO First day of listing of the Consideration Shares is expected to be on or about 3 September Total costs incurred by the Company in connection with the Transaction, including costs relating to financial and legal advisors, are estimated at approximately NOK 8.55 million (excluding value added tax). 3.7 Agreements to the benefit of members of the board or management in AKVA, Egersund Group or Egersund Net To the best of the Company's knowledge, there are no agreements entered into, or that are planned to be entered into, in connection with the Transaction, for the benefit of senior employees or members of the board of directors of AKVA; for the senior employees or members of the board of directors of the respective companies within the EG Group; or for the senior employees or members of the board of directors of the respective companies within the EN Group. 21

22 4 PRESENTATION OF AKVA 4.1 Introduction AKVA group ASA is a Norwegian public limited liability company incorporated on 18 February 1982 under the laws of Norway, with business registration number The legal and commercial name of the Company is AKVA group ASA. The Company has operations in Norway, Chile, Denmark, Scotland, Greece, Spain, Iceland, Canada, Australia and Turkey. The Company's registered business address is Nordlysvegen 4, Time, NO4340 Bryne, Norway, and its telephone number is The Company's Shares are listed on Oslo Børs, a regulated market operated by Oslo Børs ASA, under the ticker code "AKVA". The Shares are registered in the VPS under ISIN NO The objectives of the Company, as set out in the Company's articles, are to develop, produce, project, sell and market own and purchased products, and everything connected to such activity, including participation in other companies with similar activities. The activities of the Company shall in particular be directed towards technology for farming of fish and animals. The acquisition of Egersund Net represents an important strategic development for AKVA as further described in section 3.2 "Background and significance of the Transaction". 4.2 History of share capital Other than the issuance of the Consideration Shares in connection with the Transaction, the Company has not issued any shares for the period covered by the historical financial information included in this Information Memorandum (i.e. since 1 January 2015). As of the date of this Information Memorandum (and prior to the issuance of the Consideration Shares), the Company's share capital is NOK 25,834,303 dividend on 25,834,303 Shares, each with a nominal value of NOK Legal structure The Company is a Norwegian public limited liability company incorporated under the laws of Norway. Following completion of the Transaction, Egersund Net will be a whollyowned subsidiary of the Company. Please see below a list of direct and indirect subsidiaries of AKVA as of the date of this Information Memorandum: # Subsidiary Year of acquisition Location Share ownership Voting rights 1) AKVA group North America Inc Canada 100% 100% 2) AKVA group Scotland Ltd Scotland 100% 100% 3) AKVA group Software AS 1997 Norway 100% 100% 4) AKVA group Chile S.A. 1) 1998 Chile 100% 100% 5) AKVA Ltd. 2) 1998 Scotland 100% 100% 6) AKVA group Services AS 2001 Norway 100% 100% 7) AKVAsmart Ltd. (Turkey) 2005 Turkey 100% 100% 8) Helgeland Plast AS 2006 Norway 100% 100% 9) Wise lausnir ehf 2007 Iceland 100% 100% 10) AKVA group Denmark A/S 2007 Denmark 100% 100% 11) Polarcirkel AS 2010 Norway 100% 100% 12) Plastsveis AS 2013 Norway 100% 100% 13) Wise Blue AS 3) 2015 Norway 51% 51% 14) Aquatec Solutions A/S 2015 Denmark 100% 100% 15) AKVA Marine Services AS 4) 2016 Norway 68.7% 68.7% 22

23 16) AD Eiendomsselskap AS 5) 2016 Norway 100% 100% 17) Sperre AS 2016 Norway 66% 66% 18) AKVA group España S.L Spain 100% 100% 19) AKVA group Hellas SM PEC 2017 Greece 100% 100% 20) AKVA group Middle East LLC 2017 Iran 100% 100% (1) AKVA has a direct ownership interest of 87% in AKVA group Chile S.A, and an indirect ownership interest of 13% through Aquatec Solutions A/S. In May 2018, Sistemas de Recirculacion Ltda., a former subsidiary of Aquatec Solutions A/S, merged with AKVA group Chile S.A. (2) Subsidiary of AKVA group Scotland Ltd. (3) Subsidiary of Wise lausnir ehf. (4) AKVA Marine Services AS became a subsidiary of AKVA in 2016 following a merger of the companies YesMaritime AS; Rogaland Sjøtjenester AS and AD Offshore AS. (5) Subsidiary of AKVA Marine Services AS. 4.4 Business description Introduction AKVA is a technology partner and supplier of advanced equipment and services to the aquaculture industry worldwide. The Group operates in one of the world's fastest growing industries. Corporate headquarters are in Norway, but with offices in Chile, Denmark, Scotland, Greece, Spain, Iceland, Canada, Australia and Turkey, AKVA has a strong global presence. AKVA is a unique partner with the capability to offer both cage farming and land based aquaculture technology solutions and services. The Company holds strong, wellknown brand names and the product line range from feed barges, steel & plastic cages, feed systems, nets, net cleaning, underwater lights, feed cameras, environmental sensors, production and process control software, workboats, recirculation systems to PE piping etc Cage based technology The Group's main products include hardware such as plastic cages, steel cages, feed barges, feed systems, sensor and camera systems, underwater lights and net cleaning systems, sold under the Group's brands PolarcirkelTM, WavemasterTM and AkvasmartTM. The Group also exports a various degree of more complete cage farming projects. These projects include nets and mooring systems from other recognized subsuppliers, including Egersund Net. Through Helgeland Plast AS in Norway, the Group supplies polyethylene work boats and pipes to aquaculture and other industries. By including Sperre AS in AKVA in 2016, the Group also supplies ROV's and subsea solutions to the aquaculture, oil service and maritime industries. In January 2016, AKVA, together with SinkabergHansen AS and Egersund Net, established Atlantis Subsea Farming AS (each holding 33% of the share capital of Atlantis Subsea Farming AS) for the purpose of developing submersible fishfarming facilities for salmon on an industrial scale, which both will enable better and more sustainable utilization of today's locations, and open up the opportunity for farming at more exposed and more sheltered locations. The Atlantis Subsea Farming project require largescale testing of the technological and operational solutions. On 22 February 2018, the Norwegian Directorate of Fisheries announced that the Company has been granted one license. Atlantis Subsea Farming AS is now in a technology testing and planning phase with regards to execution of the project. For further information, please refer to page 9 of Group's annual report for 2017, incorporated by reference in this Information Memorandum Land based technology Recirculation technology forms the main part of the Group's Land Based Aquaculture Technology, which is developing into a major trend in global aquaculture. This technology allow the reuse (recirculation) of close to 100% of the water by cleaning the water and restoring important water quality parameters, using advanced water treatment technology. Main components used include mechanical filters, UV treatment, bio filters, degasser units, oxygenation, cooling/heating systems and lifting pumps. The main reason for reporting this separately is due to the very different nature of this business compared to the cage based and other more traditional parts of 23

24 the Group's business and products. Recirculation projects tend to be 1020 times larger (in average project value) compared to other delivery projects (other AKVA products). The sales process is substantially more complex and time consuming as it often requires extensive preproject engineering and site evaluations, as well as more complex financing arrangements. Main subsidiaries in the Group for Land Based Technology are AKVA group Denmark A/S (Denmark), Plastsveis AS (Norway) and Aquatec Solutions A/S (Denmark) Software The Group's main software products include all FishtalkTM software brands such as: Production control, planning, traceability and ERP software for both the aquaculture and the fishing industry. Main markets include Norway, Iceland, Canada, Chile and UK. AKVA is the market leader in software both to the aquaculture and fishing industries in these markets. 1 Main offices for the software activities are in Norway (Trondheim) and Iceland (Reykjavik and Akureyri). 4.5 History and development The table below provides an overview of key events in the recent history of the Company: Year Event 2015 Good order inflow during the year resulted in the highest order backlog ever A broader mix of product and services contributing to revenues in 2015 compared to earlier years, becoming a stronger and more diversified AKVA Acquisition of Aquatec Solutions A/S end of September 2015, strengthening the Group's position in the Land Based segment Dividend of NOK 1 per share (total NOK 25.8 million) was paid in November Strong order inflow during the year resulted in the highest order backlog ever of NOK 998 million Acquisition of AD Offshore AS and merging with YesMaritime AS and Rogaland Sjøtjenester AS resulted in AKVA Marine Services AS. Merged company well positioned for further growth in the farming services segment going forward Acquisition of Sperre AS; a leading ROV and subsea provider to the aquaculture industry Strong operational cash flow throughout the year Dividend of 0.75 NOK per share paid out in September Established new companies in Spain and Greece Completed refinancing of bank facilities Strong order inflow during the year resulted in the highest order backlog ever of NOK million AKVA completed its best financial performance in the Groups history Dividend of 1.25 NOK per share paid in March (0.50 NOK) and September (0.75 NOK) 2018 AKVA entered into the Transaction Agreement with EG and Egersund Net Dividend of NOK 0.75 per share paid out in March Source: The Company. 24

25 4.6 Trends AKVA has not experienced any trends that are considered significant to the Group since 31 December 2017 and to the date of this Information Memorandum. 4.7 Patents The Company holds a patent for its "Gate for insertion of cleaning plugs into a feeding systems", having Norwegian patent no The patent is connected to the Company's Akvasmart CCS Feed System. Further, the Company, through its subsidiary Sperre AS, holds a patent for "A device for operation on a surface submerged in water", having Norwegian patent no The patent is connected to Sperre AS' product "Flying Net Cleaner FNC". The Group's business relating to cage farming aquaculture, including the Akvasmart CCS Feed System and the Flying Net Cleaner, benefits from protection of these patents, and as such the Group's profitability is to an extent dependent on patent protection. 4.8 Board of directors, executive management and employees Board of Directors Pursuant to the Company's Articles of Association, the Board of AKVA shall consist of 4 to 10 members to be elected by the general meeting. The names and positions and current term of office of the Board members as at the date of this Information Memorandum are set out in the table below. Name Position Served Term expires since Hans Kristian Mong Chairman Anne Breiby Deputy Chairperson Frode Teigen Board member Evy Vikene Board member Anthony James Board member Tore Obrestad Employee's elected board member Carina Jensen Employee's elected board member Henrik Alexander Schultz Employee's elected board member The business address for all Board members in relation to their directorship with the Company is Nordlysvegen 4, Time, NO4340 Bryne, Norway. The following table sets forth, as of the date of this Information Memorandum, the number of options and shares beneficially owned by each of the members of the Board: Name Position Number of options 1) Number of Shares 1) Hans Kristian Mong 2) Chairman 13,203,105 Anne Breiby 3) Deputy Chairperson 63,800 Frode Teigen 4) Board member 13,203,105 Evy Vikene Board member 25

26 Anthony James Board member Tore Obrestad Employee's elected board member 65 Carina Jensen Employee's elected board member Henrik Alexander Schultz Employee's elected board member 662 (1) Includes both direct and indirect ownership. (2) Hans Kristian Mong, through Hådyr AS and Mongbakken AS, owns 50% of the shares in Egersund Group AS, which in turn holds 13,203,105 Shares in AKVA. (3) The shares are owned through Kjerby AS; a company 100% controlled by Anne Breiby. (4) Frode Teigen, through Kontrazi AS, owns 50% in Egersund Group AS, which in turn holds 13,203,105 Shares in AKVA Brief resumé of the members of the Board of Directors Hans Kristian Mong, Chairman Hans Kristian Mong resides in Egersund, Norway and also serves as the chairman of the board of directors of Egersund Group AS. In addition, Mr. Mong holds the position as chairman in several companies, including Egersund Net AS and Egersund Trål AS. Mr. Mong was elected to the Board of Directors in May Anne Breiby, Deputy Chairperson Anne Breiby resides in Ålesund, Norway. She holds a Cand. scient degree in Fishery biology from Tromsø University. She held positions in the Norwegian Fishfarmer's Association and the Regional Fishery Administration before serving as a Political advisor for the Minister of Fishery, Political advisor for fishery and industry matters in Parliament and Deputy Minister in the Ministry of Industry and Energy. Mrs. Breiby has broad experience from serving as a board member for several companies and institutions, including Domstein ASA, Ulstein group ASA, Folketrygdfondet, Sparebanken Møre, Innovation Norway, Norwegian Research Council, Rem ASA, Kongsberg Satellite Service AS, Scandinavian Business Seating AS and Fiskeribladet Fiskaren AS. Mrs. Breiby was elected to the Board of Directors in September Frode Teigen, Board member Frode Teigen resides in Egersund, Norway. He is a private investor and serves as a board member of several other Norwegian companies. Mr. Teigen was elected to the Board of Directors in June Evy Vikene, Board member Evy Vikene resides in Stavanger, Norway. Mrs. Vikene holds a Bachelor's degree in Aquaculture and Environmental Engineering from the University of Stavanger and an Executive Master of Management from the Norwegian Business School. She worked 10 years in various positions in Skretting Aquaculture Research Centre (ARC) before she joined Skretting AS where she held various management positions with domestic and global responsibility. From early 2013 to mid2015 she held the position as Head of Development in Fretex Norge AS. She was a member of the board of Fretex MidtNorge AS in the same period. She has since mid2015 held positions in Skretting AS, currently as Marketing Manager for the business unit Global Salmon and Fish feed Southern Europe. Mrs. Vikene was elected to the Board of Directors in May Anthony James, Board member Anthony James resides in Chester, England. He is Chief Investment Officer in Wheatsheaf Group Ltd. Mr. James joined Wheatsheaf Group Ltd. from Grosvenor, where he spent five years as Group Corporate Finance Director. Prior to Grosvenor, Mr. James was Head of Energy & Natural Resources M&A at KPMG Corporate Finance where he led a wide range of acquisition, disposal and other strategic advisory assignments across the sector. His previous roles have included senior finance and corporate development positions at Philips Electronics, both in the Netherlands and China. Mr. James was elected to the Board of Directors in May Tore Obrestad, Employee's elected board member Tore Obrestad resides in Vigrestad, Norway. Mr. Obrestad qualified as an electroautomation systems engineer at technical college and has completed an educational science program at UiS. He has been employed in AKVA 26

27 since the autumn of 1988, incorporating a 4year sabbatical as a lecturer at a college of further education. He is currently Technical Manager Nordic in AKVA. Mr. Obrestad was elected as board member by the Company's employees in Carina Jensen, Employee's elected board member Carina Jensen resides in Brønnøysund, Norway. Mrs. Jensen holds a Bachelor's degree in Micro technology from Buskerud and Vestfold University College. She has been employed in Plastsveis AS since 2012, where she worked as a Quality Manager until 2015 and later took the position as Operations Manager. Carina has previous experience from REC Wafer Norway AS and was on the board of directors of Plastsveis AS from 2013 to Mrs. Jensen was elected as board member by the Company's employees in Henrik A. Schultz, Employee's elected board member Henrik A. Schultz resides in Trondheim, Norway. Mr. Schultz earned a cand. mag. degree in biology/aquaculture at NTNU in 2003 and was first employed in AKVA in He is currently employed as biological consultant working with the Fishtalk software. Henrik has previous experience from SATS, Eniro and private startup projects. Mr. Schultz was elected as board member by the Company's employees in Management The names and positions of the members of the Company's executive management (the "Management") as of the date of this Information Memorandum are set out in the table below. Name Position Employed since Hallvard Muri Chief Executive Officer 2016 Simon Nyquist Martinsen Chief Financial Officer 2017 Per Andreas Hjetland Chief Operations Officer Nordic 2008 Svein Jørgen Fuglesang Senior Vice President Supply Chain & Manufacturing 2017 Trond Severinsen Senior Vice President Technology & Development 1993 Morten Nielsen Chief Operations Officer Land Based 2015 Inge Forseth Chief Operations Officer Software 2014 Andrew Campbell Regional President, Americas & Australasia 2000 David Thorburn Regional President, Europe & Middle East 2008 The business address for the members of the Company's Management in relation to their employment with the Company is Nordlysvegen 4, Time, NO4340 Bryne, Norway. The following table sets forth, as of the date of this Information Memorandum, the number of options and shares beneficially owned by each of the members of the Company's Management: Name Position Number of options 1) Number of Shares 1) Hallvard Muri CEO 22,662 Simon Nyquist Martinsen CFO 17,662 Per Andreas Hjetland COO Nordic 4,048 Svein Jørgen Fuglesang SVP Supply Chain & Manufacturing 6,912 Trond Severinsen SVP Technology & Development 973 Morten Nielsen COO Land Based 1,548 Inge Forseth COO Software 1,548 Andrew Campbell RP, Americas & Australasia 1,548 David Thorburn RP, Europe & Middle East 1,283 27

28 (1) Includes both direct and indirect ownership Brief resumé of the members of the Management Hallvard Muri, Chief Executive Officer Hallvard Muri assumed the position as CEO in November Prior to joining AKVA, he was the CEO of Aker BioMarine AS. Before joining Aker BioMarine AS, Mr. Muri had extensive experience serving in various senior management positions in Aker group companies from 2002 onwards. Hallvard has more than 25 years of senior management experience from a variety of different industries as well as fisheries and aquaculture related sectors. Mr. Muri holds an MsC (Siviløkonom) from BI/Norwegian Business School. He is a Norwegian citizen and resides in Asker, Norway. Simon Nyquist Martinsen, Chief Financial Officer Simon Nyquist Martinsen assumed the position as CFO in February Prior to joining AKVA, he was CFO of Constructor Group, a paneuropean provider of storage solutions. Mr. Martinsen has extensive experience both as a financial as well as an operational executive. He has also served as acting CEO of Constructor Group and has held several positions within the Aker group, including Norway Seafoods ASA. Mr. Martinsen spent the first years of his career with KPMG. He holds a Master in Accounting and Auditing from the Norwegian School of Economics (NHH) and is qualified as a State Authorized Public Accountant in Norway. Mr. Martinsen is a Norwegian citizen and resides in Bærum, Norway. Per Andreas Hjetland, Chief Operations Officer Nordic Per Andreas Hjetland has been employed with AKVA ASA since 2008 where he assumed the position as COO in September Prior to joining AKVA, he held several senior positions with international companies. His professional background covers industrial technologies, and he also brings with him extensive experience in business operations, sales & marketing. Mr. Hjetland's academic background was gained at the Technical School of Stavanger. He is a Norwegian citizen and resides in Høle, Norway. Svein Jørgen Fuglesang, Senior Vice President Supply Chain & Manufacturing Svein Jørgen Fuglesang assumed the position as SVP in July Prior to joining AKVA, he was responsible for global manufacturing in Aker Solutions Subsea. He has extensive experience as operational executive in various supply chain and manufacturing environments. Mr. Fuglesang has experience from multiple industries, including chemical processing, pharmaceuticals, foodstuff, management consulting, logistics and Oil&Gas. Mr. Fuglesang holds a Master in Chemical Engineering with Process Biotechnology from University of Strathclyde in Scotland. He is a Norwegian citizen and resides in Oslo, Norway. Trond Severinsen, Senior Vice President Technology & Development Trond Severinsen joined AKVA in 1993 as General Manager for the Company's operations in Canada; a role he held until 2003 when he became CMO. He has worked within sales, marketing and R&D related to technology for the fish farming industry since early Mr. Severinsen had previously worked for Sea Farm Trading ( ), setting up their Canadian office in He later ran his own business until He is a Norwegian citizen and resides in Klepp, Norway. Morten Nielsen, Chief Operations Officer Land Based Morten Nielsen assumed the position as COO in August Prior to this position, Mr. Nielsen has held the position as CEO and founder of Aquatec Solutions A/S since During his 20 year long career he also has experience as R&D Manager and Operations Manager for DIAT/Cimbria Aquatec. Mr. Nielsen holds a Master of Science in Aquaculture from Aalborg University. He is a Danish citizen and resides in Egtved, Denmark. Inge Forseth, Chief Operations Officer Software Inge Forseth joined AKVA in His professional includes national and international managerial positions in companies such as Eltek, Autronica and Glen Dimplex. He holds extensive experience from a range of 28

29 technological fields, covering both the hardware as well as the software area. Mr. Forseth holds a Master of Science in electrical engineering from the Norwegian University for Science and Technology (NTNU) in Trondheim. He is a Norwegian citizen and resides in Trondheim, Norway. Andrew Campbell, Regional President, Americas & Australasia Andrew Campbell joined AKVA in 2000 and has been General Manager in Chile since From 1989 to 2000, he worked as a Production Manager in the salmon industry in New Zealand for the New Zealand Salmon Company Ltd. Mr. Campell holds a bachelor of science degree from New Zealand's Victoria University and is a New Zealand citizen with permanent residency in Chile. David Thorburn, Regional President, Europe & Middle East David Thorburn joined AKVA in Prior to that he had been General Manager of Idema Aqua UK and Europe operations. Mr. Thorburn has been involved in the aquaculture industry for nearly 30 years. He has managed projects with companies working on both landbased and cage aquaculture on a global scale. His early career was as a Service Manager in Anadrill Schlumberger in the oil industry travelling extensively working on international projects. It was at this time that he first became interested in the aquaculture industry. David is a Scottish citizen and resides in Nairn near Inverness Benefits upon termination The Chief Executive Officer, Hallvard Muri, is entitled to a 12month severance payment if his employment agreement is terminated. Further, the Chief Financial Officer, Simon Nyquist Martinsen, and the Senior Vice President Supply of Chain & Manufacturing, Svein Jørgen Fuglesang, are each entitled to a 6month severance payment if their employment agreements are terminated. Other than as stated above, there are no agreements with any members of the Board of Directors which provide for benefits upon termination of the directorship, or any agreements with any members of the Company's Management which provide for benefits upon termination of their employment Employees In addition to the employees of Egersund Net (as detailed in section 6.3 below), the Group has a total of 1,014 employees located in 11 different countries as of the date of this Information Memorandum. 4.9 Corporate Governance The Company's Board of Directors approved the Corporate Governance Policy on 11 April 2018 (available on the Company's website The Company complies with the Norwegian Code of Practice for Corporate Governance dated 30 October 2014 (the "Corporate Governance Code") with the following exceptions: 3. Equity and dividends The Board authorisations to (i) increase the share capital and (ii) acquire own shares, both granted by the annual general meeting on 15 May 2018, are not restricted to defined purposes as recommended by the Corporate Governance Code. Accordingly, the general meeting did not vote separately on the authorisations concerning each purpose. The Board is of the view that it is in the common interest of the Company and its shareholders that the Company is able to raise equity and acquire own shares on short notice in connection with transactions etc. without first having to call for an extraordinary general meeting to approve such share capital increase or buyback. 4. Equal treatment of shareholders and Based on the Board authorisation to increase the share capital granted by the annual general meeting on 15 May 2018, the Board may decide to waive the shareholder's preemptive 29

30 transactions with close associates rights in connection with a share capital increase. Any decision by the Board to waive the preemptive rights of shareholders will only be made after careful consideration and if such waiver can be properly justified in the relevant circumstances. Any transactions carried out by the Company in its own shares will be carried out either on Oslo Børs or at prevailing stock market prices. In situations with limited liquidity in the Company's shares, the Board will consider alternatives in order to ensure the equal treatment of shareholders. 8. Corporate assembly and board of directors: Composition and independence The Board itself elects the chair and deputy chair of the Board, which represents a deviation from the Corporate Governance Code. As the individuals nominated to the Board are prequalified through the work of the nomination committee and elected by the general meeting, it is the Board's opinion that it is reasonable that the Board is qualified to elect the chair and deputy chairperson of the Board Governmental, legal or arbitration proceedings As of the date of this Information Memorandum, the Group has not during the last 12 months been involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Group is aware) which may have or have had in the recent past significant effects on the Group's financial position or profitability Material contracts outside of the ordinary course of business Other than the Transaction Agreement, the Company has not entered into any material contracts that are not in the ordinary course of business for the two years immediately preceding the date of this Information Memorandum Major shareholders As of 18 July 2018, the Company has 1133 shareholders. There are no differences in voting rights between the Shares. Shareholders owning 5% or more of the Shares have an interest in the Company's share capital which is notifiable pursuant to the Norwegian Securities Trading Act. As of 18 July 2018 and to the best of the Company's knowledge, the following shareholders has holdings in excess of the statutory thresholds for disclosure requirements: Egersund Group AS holds 13,203,105 Shares, corresponding to 51.11% of the Company's total share capital. Wheatsheaf Invest holds 3,900,000 Shares, corresponding to 15.10% of the Company's total share capital Significant change Other than as set out below, there have been no significant changes in the financial or trading position of the Group following 31 March 2018: On 15 May 2018, the Company and Egersund Group signed a letter of intent for the acquisition of all issued and outstanding shares of Egersund Net. For further information, see section 3 above. 30

31 On 28 June 2018, the Company entered into the Transaction Agreement, see section 3.5 above. 31

32 5 HISTORICAL FINANCIAL INFORMATION FOR AKVA GROUP ASA 5.1 Introduction The Company's annual reports, audited historical financial information and audit reports for the financial years 2017, 2016 and 2015 are incorporated by reference to this Information Memorandum, see section The annual financial statements for 2017 and 2016 have been audited by KPMG AS, the Company's statutory auditor. The annual financial statements for 2015 have been audited by Ernst & Young AS, see section 5.3 below. The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. The IFRS principles have been updated and applied consistently for the financial years Please see the Company's financial statements for the financial year 2017 on page 36 for the Company's significant accounting policies, incorporated by reference to this Information Memorandum. 5.2 Selected financial information The selected financial information set forth below should be read in conjunction with the Company's published financial statements and its accompanying notes Income statement The table below sets out selected data extracted from the Company's income statement for the years ended 31 December 2017, 2016 and 2015 (audited), and for the three months periods ended 31 March 2018 (unaudited), with comparative numbers for the three months period ending 31 March 2017 (unaudited). Three months ended 31 March (unaudited) Year ended 31 December (audited) (all figures in NOK thousand) OPERATING REVENUES Revenues Other income Total revenues OPERATING EXPENSES Cost of materials Payroll expenses Other operating expenses Total operating expenses OPERATING PROFIT BEFORE DEPRECIATION AND AMORTIZATION (EBITDA) Depreciation and amortization OPERATING PROFIT (EBIT) FINANCIAL INCOME AND EXPENSES Financial income Financial expenses (7 721) (7 728) (28 361) (31 362) (12 603) Net financial income (expense) (7 011) (6 281) (21 556) (26 446) (9 619) 32

33 PROFIT BEFORE TAX Taxes NET PROFIT FOR THE Y EAR NET PROFIT (LOSS) ATTRIBUTABLE TO: Noncontrolling interests Equity holders of AKVA group ASA Earnings per share (NOK) 0,94 0,77 3,86 1,06 2,20 Diluted earnings per share (NOK) 0,94 0,77 3,86 1,06 2, Statement of financial position The table below sets out selected data extracted from the Company's statement of financial position as at 31 March 2018 (unaudited) and its consolidated statement of financial position as at 31 December 2017, 2016 and 2015 (audited). Three months ended 31 March (unaudited) Year ended 31 December (audited) (all figures in NOK thousand) NONCURRENT ASSETS Deferred tax asset Intangible assets and goodwill Goodwill Other intangible assets Total intangible assets and goodwill Tangible fixed assets Land and building Machinery and equipment Total tangible fixed assets Longterm financial assets Investments in associated companies Other longterm financial assets Total longterm financial assets Total noncurrent assets CURRENT ASSETS Inventory Receivables Accounts receivables Prepayments to suppliers Other receivables Total receivables Cash and cash equivalents Total current assets TOTAL ASSETS

34 EQUITY Equity attributable to equity holders of AKVA group ASA Noncontrolling interests Total equity LIABILITIES Noncurrent liabilities Deferred tax liabilities Liabilities to financial institutions Other long term liabilities Total noncurrent liabilities Current liabilities Liabilities to financial institutions Trade payables Current tax payables Public duties payable Prepayments from customers Other current liabilities Total current liabilities Total Liabilities TOTAL EQUITY AND LIABILITIES Statement of cash flow The table below sets out selected data extracted from the Company's statement of cash flow for the years ended 31 December 2017, 2016 and 2015 (audited), and for the three months ended 31 March 2018 (unaudited), with comparative numbers for the three months period ending 31 March 2017 (unaudited). Three months ended 31 March (unaudited) Year ended 31 December (audited) (all figures in NOK thousand) Cash flow from operating activities Profit before taxes Taxes paid Net interest cost Gain (loss) on disposal of fixed assets Depreciation and amortization Changes in stock, accounts receivable and trade payables Changes in other receivables and payables Net foreign exchange difference Cash generated from operating activities Interest paid Interest received

35 Net cash flow from operating activities Cash flow from investment activities Investments in fixed assets Proceeds from sale of fixed assets Net repayment of longterm receivables Acquisition of subsidiary net of cash acquired 1) Net cash flow from investment activities Cash flow from financing activities R e p a y m e n t o f b o r r o w i n g s Proceed from borrowings Dividend payment Sale/(purchase) own shares Net cash flow from financing activities N e t c h a n g e in c a s h a n d c a s h e q u i v a l e n t s Net foreign exchange differences Cash and cash equivalents at Cash and cash equivalents at ) Payment of contingent consideration related to acquisition of subsidiaries is included in Acquisition of subsidiary net of cash acquired Statement of changes in equity The table below sets out selected data extracted from the Company's statement of changes in equity for the years ended 31 December 2017, 2016 and 2015 (audited) and for the three months period ended 31 March 2018 (unaudited). Group Share capital Share Other paidin premium capital Total paid in capital Translation differences Other equity Total Other equity Retained earnings Total equity Noncontrolling interest Equity shareholders AKVA group Equity as at Net movement in cash flow hedges Translation difference Total other comprehensive income Profit (loss) for the period Total comprehensive income Dividend Noncontrolling interests arising on a business combination Share buyback Equity as at Equity as at Net movement in cash flow hedges Translation difference Total other comprehensive income Profit (loss) for the period

36 Total comprehensive income Dividend Noncontrolling interests arising on a business combination Sale / (purchase) of own shares Equity as at Equity as at Net movement in cash flow hedges Translation difference Total other comprehensive income Profit (loss) for the period Total comprehensive income Dividend Noncontrolling interests arising on a business combination Adjustment of contingent consideration Sale / (purchase) of own shares Equity as at Equity as at Adjustment on initial application of IFRS 15 (net of tax) Adjusted balance at 1 January Net movement in cash flow hedges Translation difference Total other comprehensive income Profit (loss) for the period Total comprehensive income Dividend Noncontrolling interests arising on a business combination Adjustment of contingent consideration Sale / (purchase) of own shares Equity as at Segment information The table below sets out revenue information for the Group by area of activity for 2017, 2016 and 2015: Operating revenue Construction contracts Product sales Service Rental contracts Software Other income Total operating revenue

37 The table below sets out revenue information for the Group by geographical area for 2017, 2016 and 2015: Operating revenue external customers Norway Chile Canada Scotland Denmark Iceland Other Group For further information on the Group's segment reporting, see Note 2 to the Group's audited consolidated financial statements for the year ended 31 December 2017, incorporated by reference in this Information Memorandum. 5.3 Statutory auditor KPMG AS ("KPMG") has been the Company's statutory auditor since July KPMG's registered business address is Sørkedalsveien 6, NO0369, Oslo, Norway. The partners of KPMG are members of The Norwegian Institute of Public Accountants (No.: "Den Norske Revisorforening"). The Company's annual financial statements for 2017 and 2016 have been audited by KPMG, and the Company's annual financial statements for 2015 have been audited by Ernst & Young AS ("EY"). EY's registered business address is Dronning Eufemias gate 6, Oslo Atrium, P.O. Box 20, NO0051 Oslo, Norway. The partners of EY are members of The Norwegian Institute of Public Accountants (No.: "Den Norske Revisorforening"). The Company's annual reports and audit reports for the financial years 2017, 2016 and 2015 are incorporated by reference to this Information Memorandum, see section Further, KPMG has issued an Independent Practitioner's Assurance report on the compilation of pro forma financial information included in Appendix A. 37

38 6 PRESENTATION OF EGERSUND NET 6.1 Introduction Egersund Net is a private limited liability company incorporated under the laws of Norway. The legal and commercial name of Egersund Net is Egersund Net AS. Egersund Net was incorporated on 1 July 1996 and is registered in the Norwegian Register of Business Enterprises with business registration number Egersund Net's registered business address is Svanavågveien 30, NO4374 Egersund, Norway, and the telephone number is Egersund Net produces nets and mooring solutions for the aquaculture industry, including top nets, tube nets and special products such as sweep nets, fish sorting and mort collector nets. The company has nine service stations along the coast of Norway, and production and service facilities in Lithuania and Turkey. Following completion of the Transaction, Egersund Net will be a whollyowned subsidiary of AKVA. Please see below a list of the companies in which Egersund Net has a direct or indirect ownership interest, and in which AKVA will hold an indirect ownership interest, following completion of the Transaction: # Company Business reg. no. Location Share ownership 1) Egersund Trading AS Bekkjarvik, Norway 100% 2) UAB Egersund Net Tauragé, Lithuania 100% 3) Nofi Oppdrettsservice AS Kvaløya, Norway 50% 4) Grading Systems (UK) Limited SC United Kingdom 70% 5) Emel Balik ve Balik Agi Tur. Gida Torbali Izmir, Turkey 50% lth.lhr.san.tic.ltd.sti 6) Atlantis Subsea Farming AS Bryne, Norway 33% 7) Blue Planet AS Stavanger, Norway 10.3% 8) Blue Farm AS Stavanger, Norway 12% Pursuant to the Transaction Agreement, certain assets previously held by the EN Group have been or will be transferred to the EG Group prior to, and as a condition for, completion of the Transaction. This includes the EN Group's material owned properties which shall be leased back on terms and conditions agreed among the parties. For further information on the PreCompletion Transactions, please refer to section above. 6.2 Board of directors and executive management The board of directors of Egersund Net currently consists of four individuals. The names and positions and current term of office of the board of directors of Egersund Net are set out in the table below. Name Position Served since Term expires Hans Kristian Mong Chairman Ingvald Fardal Board member Harald Røkenes Board member Jan Thore Hetland Board member The executive management of Egersund Net currently consists of seven individuals. The management team is presented in the table below: 38

39 Name Position Employed since Geir Henning Risholm Managing Director 2010 Geir Kåre Tønnessen Sales Manager 1985 Glenn Mo Service Manager 2006 Anders Myklebust Production Manager 1988 Helge Sivertsen (1) Procurement Manager 2008 Ove Veivåg Product Technical Manager 2005 Bjarte Sævareid R&D Manager 2017 (1) Helge Sivertsen serves as procurement manager pursuant to an agreement between Egersund Net and Egersund Management AS in which Mr. Sivertsen is employed. Financial and accounting services are provided by Egersund Management AS pursuant to a management agreement with Egersund Net. 6.3 Employees As of the date of this Information Memorandum, the EN Group has approximately 450 employees. The employees are based in Egersund, Austevoll, Manger, Kristiansund, Rørvik, Brønnøysund, Vevelstad, Bergen and Andenes in Norway and in Tauragé, Lithuania. 6.4 Business of Egersund Net Introduction Egersund Net is a supplier of net technology, services and equipment for the aquaculture industry. Egersund Net started net production in the early 1970's and was established as a separate company in Over the last years Egersund Net has expanded greatly with regard to business volume as well as the number of newly established service stations. From the modest start in Svanavågen, Egersund, the company has now a number of service stations along the coast of Norway (Egersund, Austevoll, Manger, Kristiansund, Rørvik, Brønnøysund, Vevelstad, Vesterålen and Skjervøy) to support fish farmers with repairs and maintenance of the nets. Through its subsidiary Egersund Trading, the EN Group offers work clothes, HSE gear and mooring equipment from its outlets in Austevoll, Kristiansund and Rørvik. Furthermore, in March 2018 the EN Group added the Flexi Panel (No.: "Shetlandsristen") to its product range. FlexiPanel is a fish grading device designed to allow size grading of live fish in the water; quickly, accurately and without physical damage to the fish. The production of new nets takes place in Tauragé, Lithuania, through the company's subsidiary UAB Egersund Net. The EN Group is certified according to NS 9415, ISO 9001:2015 and ISO:14001: Products Fish farming nets The EN Group considers optimization and customizing net design as an important business area. Its development and testing have resulted in a net with characteristics such as reduced abrasion, giving less risk of escapes. The EN Group's solutions includes attachment loops with userfriendly design, and all attachment loops are plastic covered using colour codes in order to ensure safe handling. Proper elongation allows the structure to move in line with the forces of nature. This also improves the welfare of the farmed fish, and reduce chafing from cage and netting. 39

40 Coned Nets The EN Group has designed the Egersund Net Circle Angled ("ENCA") and Egersund Net Circle Coned ("ENCC") enabling simple and safe handling of nets. These solutions are based on more than 40 years of experience and make operations easier, improves safety and may be costefficient. A coneshaped structure with single weight system can be delivered with a circumference up to 200m and more. The net design ENCC has been supplied for a number of years, and based on valuable feedback from the company's customers, Egersund Net developed the alternative net design, ENCA, also equipped with centre weight. The systems have been carefully tested and documented, and both designs retain their volume and shape even when deployed at exposed locations. StraightWall Circular Net The EN Group has also designed the Egersund Net Circle ("ENC") for optimal use of volume. The volume of this design can easily be adjusted in a simple manner by varying the wall depth, the use of horizontal ropes and by "drying" the net. The structure is very flexible and can be used regardless of the local water depth and with various weight systems. The ENC design has been thoroughly tested in both the SINTEF flume tank located at Hirtshals, Denmark, and in full scale, and the EN Group has, in cooperation with several customers, accumulated solid experience, competence and documentation related to the design. All circular designs can be adapted to sinker tubes or single weights. 40

41 Nets for Square Cages The designs Egersund Net Rectangular ("ENR") and Egersund Net Square ("ENS") are custom made in accordance with individual requirements and installation. The EN Group supplies rectangular as well as square solutions for steelbased installations and offers smart solutions for net walls as well as net bottoms. Nets adapted to steelbased installations can be delivered in the form of straight walled, coned or pointed designs. The bottom of the net can be of a sloping or nonsloping design Tube Net The EN Group also offers the socalled "EN Tubenet"; a fully integrated concept to reduce the attachment of sea lice and preventing escape. The solution provides the best possible conditions for growth, regarding good oxygen supply and optimal animal welfare. The development of the EN Tubenet started in Following successful smallscale testing at the Institute of Marine Research and largescale testing by fish farmers, Egersund Net received a patent for the Tubenet in In the same year, the company also received the recognized GSM Innovation Award at the Aqua Vision conference. The final product is a safe and functional technical solution, and when deployed at the proper time, it can reduce cost, due to less or no need for lice removals. In addition, any holes in the upper part of the net caused by flotsam or vessels will not be a concern, as the fish is enclosed at the deeper part of the net. The concept also provides the fish farming industry with a new tool for AGD treatment, by use of freshwater, resulting in reduction of chemicals used and reduction of stress on the fish. A smaller buoyant pen is installed and moored inside the main pen. Attached to the inner pen, a tube made of tarpaulin is extended down to a specified depth. A roof of netting is extracted from the baseline of the tube horizontally to the wall of the outer net. By submerging the salmon it will stay below the critical depth in which the sea lice thrives, and the salmon is given access to the surface by entering the tube. The tube creates a sea licefree zone. The EN Tubenet concept may be integrated in new as well as existing installations Treatment of nets The EN Group has developed an indoor treatment facility for nets. Its net treatment facilities ensure identical conditions throughout the year and has a high level of efficiency. The EN Group puts a great deal of emphasis on the safety of operations during the production process, and when the net has been suspended and is ready for 41

42 treatment, dipping, drying and packing is executed in a single operation. This reduces the risk of damage being caused to the net. The EN Group focuses on quality during the entire process; dipping, drying as well as net handling. To ensure that the result from the treatment of a net is optimal, including the absorption of coating or antifouling, it impregnates the nets by a process based on dipping. The EN Group is currently offering coating and antifouling products from NetKem, SteenHansen and Brynsløkken Netting The EN Group has a high focus on continuity and efficiency throughout the whole manufacturing process, from the manufacturers of the filaments to the end product. The EN Group has full traceability in its production process and uses filaments from its European suppliers and delivers superknot, hexagonal netting, standard knotless netting as well as a variety of knotted netting. The EN Group's netting is manufactured of Nylon P6 or Dyneema filaments. The netting is manufactured with a mesh width of 1008 meshes, and the company is able to produce netting with a breaking strength from 36 kg up to 191 kg. Based on longterm cooperation with its suppliers, Egersund Net has gathered a great deal of experience, competence and understanding of product characteristics Top Nets The EN Group offers several designs of top nets made from various materials. The top nets are adapted to the different types of pens and can be supplied for centre support, hamster wheels and top net poles. The EN Group also provides top nets for smaller designs with no centre support located in the centre Special products Sweep nets The EN Group offers a variety of special products to the fishfarming industry, including sweep nets, which are supplied for a number of different purposes. An ordinary sweep net is installed in order to encircle a large amount of fish to allow quick and efficient pumping of fish into the well boat. The EN Group also offers sweep nets for sampling of fish. The sweep nets are installed to fit the circumference and depth of each net. Mort collectors The EN Group provides various types of mort collectors; a tool for collecting and removal of mort. The group has a solid experience with the production of mort collectors, and the operation involves minor risk of damaging 42

43 the net. The collectors are manufactured with a circumference of 1 and 1.5 meters and can be supplied with a single or double ring Services The EN Group offers service supplied by nine modern service facilities along the coast of Norway, from Egersund to Skjervøy. The facilities ensure that the group's customers can rely on a high level of service on their nets and equipment throughout the lifespan of the products. The copper ratio in the wastewater from the facilities is lower than the mandatory limits set by the Norwegian authorities. Besides lower copper ratio, the EN Group monitors and makes sure that the discharge is free of pathogens. Two types of waste are removed during the cleaning process; one contains sludge waste and the other contains coarse waste. The sludge waste is sent for copper recycling, and the organic waste is sent to an approved partner for incineration Research and development The EN Group is continuously engaged in research and development activities, emphasising improvement and innovation. The group intends to reduce the risk of escapes and diseases, as well as to optimise handling and operation. The EN Group invests considerable resources on verification of new solutions, often in cooperation with the customer, research institutions and other cooperating partners, in order to ensure that its provided solutions are safe for customer use. In addition, the EN Group maintains emphasis on simplifying operations and works on continuous product development, as well as testing of various designs in cooperation with its customers. The laboratory of the EN Group is equipped with advanced technological equipment for verifying the characteristics of ropes and other materials. All components are carefully tested and documented before being implemented in any of the company's products. Furthermore, the EN Group invests major resources in product development and testing of models in cooperation with its customers. A test tank belonging to SINTEF Fisheries and Aquaculture is often used in order to improve the company's knowledge on various designs. The test tank allows simulation of various currents and wave conditions. 43

44 6.4.5 Trends Following the acquisition of 70% of the shares in Grading Systems (UK) Limited in March 2018, the EN Group has added the Flexi Panel (No.: "Shetlandsristen") to its product range. FlexiPanel is a fish grading device designed to allow size grading of live fish in the water; quickly, accurately and without physical damage to the fish. Other than as stated above, Egersund Net has not experienced any trends that are considered significant to the EN Group since 31 December 2017 and to the date of this Information Memorandum Patents The EN Group, through its 70% subsidiary Grading Systems (UK) Ltd., holds a patent for the FlexiPanel (No.: "Shetlandsristen"), having Norwegian patent no The patent is used in its business relating to sorting of fish species (and bycatch) in nets. The EN Group further holds the following fish grading related patents: UDL Ref. Catchword Grant No. Country P95444ACN Passive Fish Grader Divisional CN China P95444AU Passive Fish Grader Australia P95444BR Passive Fish Grader PI Brazil P95444CA Passive Fish Grader Canada P95444CL Passive Fish Grader Chile P95444DK Fish Grading Device Denmark P95444ES Fish Grading Device Spain P95444FR Fish Grading Device France P95444GB Passive Fish Grader United Kingdom P95444GR Fish Grading Device Greece P95444HK Passive Fish Grader Hong Kong P95444IE Fish Grading Device Ireland P95444IS Passive Fish Grader 2188 Iceland P95444IT Fish Grading Device Italy P95444JP Passive Fish Grader Japan P95444KR Passive Fish Grader Republic of Korea 44

45 P95444MX Passive Fish Grader Mexico P95444NO Passive Fish Grader Norway P95444NZ Passive Fish Grader New Zealand P95444PT Fish Grading Device Portugal P95444TR1 Fish Grading Device Turkey P95444US Passive Fish Grader United States of America P95444VN Passive Fish Grader 4763 Vietnam P95444ZA Fish Grading Device 2002/3300 South Africa Further, the EN Group holds a patent for the EN Tubenet, having Norwegian patent no The patent is connected to a fully integrated concept to reduce the attachment of sea lice and preventing fish escapes. For further information on the EN Tubenet, please refer to section above. The EN Group's business relating to fish grading and reducing sea lice and preventing fish escapes, benefits from protection of these patent, and as such the EN Group's profitability is to an extent dependent on patent protection. 6.5 Governmental, legal or arbitration proceedings From time to time the EN Group may be involved in litigation, disputes and other legal proceedings arising in the normal course of its business. In February 2018, 54,000 salmon escaped from Egersund Net's customer Marine Harvest Norway AS' site Geitryggen in Nærøy, Norway. The escape occurred when a cage net, delivered by Egersund Net's Rørvik department, was damaged during an operation at the site. The Directorate of Fisheries is still in the process of investigating the cause of the escape and has secured relevant evidence, but no conclusion has been reached. Egersund Group has under the Transaction Agreement agreed to indemnify and hold the EN Group and AKVA harmless for and against any claim, loss, liability, cost, taxes and expenses relating to this fish escape incident. Other than the mentioned matter, the EN Group neither is, nor has, during the course of the twelve months preceding the date of this Information Memorandum been involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the EN Group is aware) which may have or have had in the recent past significant effects on the EN Group's financial position or profitability. 6.6 Material contracts outside of the ordinary course of business Other than the Transaction Agreement, Egersund Net has not entered into any material contracts that are not in the ordinary course of business for the two years immediately preceding the date of this Information Memorandum. 6.7 Financial information of Egersund Net and the EN Group Introduction Egersund Net AS has prepared its financial statements for 2017, 2016 and 2015 in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway ("NGAAP"). The financial statements have been audited by the company's statutory auditor, Iversen Revisjon AS, with registration number , and registered business address at Spinnerigaten 15, NO4370 Egersund, Norway. The partners of Iversen Revisjon AS are members of The Norwegian Institute of Public Accountants (No.: "Den Norske Revisorforening"). 45

46 6.7.2 Selected financial information Income statement The table below sets out selected data extracted from Egersund Net's audited unconsolidated income statement for the years ended 31 December 2017, 2016 and 2015, and from the unaudited consolidated income statement for the year ended 31 December for 2017 for the EN Group: (all figures in NOK 000) Year ended 31 December (audited unconsolidated) Egersund Net AS Year ended 31 December (unaudited consolidated) EN Group Operating income and operating expenses TOTAL OPERATING INCOME Cost of materials Payroll expenses Depreciation on tangible and intangible assets Other operating expenses Operating expenses Operating profit Financial income and expenses Financial income Financial expenses Result from associated companies Net financial income and expenses Ordinary result before tax Tax on ordinary result Ordinary result after tax NET PROFIT (1) Figures from Egersund Net AS, Egersund Trading AS and UAB Egersund Net are included in the consolidated income statement in addition to associated companies, Nofi Oppdrettsservice AS and Emel Balik which is presented according to the equity method. (2) The Transaction will exclude properties and some shareholdings currently held directly or indirectly by Egersund Net. Please refer to section "PreCompletion Transactions" and section 7 "Unaudited Pro Forma Financial Information" for further details Statement of financial position The table below sets out selected data extracted from Egersund Net's audited unconsolidated balance sheet as of 31 December 2017, 2016 and 2015, and from the unaudited consolidated balance sheet as of 31 December 2017 for the EN Group: (all figures in NOK) Year ended 31 December (audited unconsolidated) Egersund Net AS Year ended 31 December (unaudited consolidated) EN Group ASSETS Fixed assets

47 Research and development Deferred tax assets Goodwill Total intangible assets Tangible fixed assets Land, buildings and other real estate Machinery and equipment Total tangible assets Fixed financial assets Investments in subsidiaries Investments in associated companies Loans to associated companies Other financial assets Total fixed financial assets Total fixed assets Current assets Inventories Debtors Accounts receivables Other shortterm receivables Total receivables Cash and deposits Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity Share capital Share premium Other paidin equity Other equity Total equity Liabilities Noncurrent liabilities Other long term liabilities Total other noncurrent liabilities Current liabilities Liabilities to financial institutions Trade creditors

48 Tax payable Public duties payable Other current liabilities Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES (1) Figures from Egersund Net AS, Egersund Trading AS and UAB Egersund Net are included in the consolidated income statement in addition to associated companies, Nofi Oppdrettsservice AS and Emel Balik which is presented according to the equity method. (2) The Transaction will exclude properties and some shareholdings currently held directly or indirectly by Egersund Net. Please refer to section "PreCompletion Transactions" and section 7 "Unaudited Pro Forma Financial Information" for further details Significant change Other than as set out below, there have been no significant changes in the financial or trading position of the EN Group following 31 December 2017: On 8 March 2018, Egersund Net entered into an agreement to acquire 70% of the shares in Grading Systems (UK) Limited (business reg. no. SC ) for a total of NOK 29,500,000. The remaining shares are held by Viking Atlantic AS. On 28 June 2018, Egersund Net entered into the Transaction Agreement with AKVA and Egersund Group, see section 3.5 above. During the period from April 2018 to completion of the Transaction Agreement, the EN Group will complete the PreCompletion Transactions, please see section above. 48

49 7 UNAUDITED PRO FORMA FINANCIAL INFORMATION 7.1 Transaction background On 28 June 2018, AKVA entered into the Transaction Agreement with Egersund Group and Egersund Net, under which AKVA, subject to the terms and conditions of the Transaction Agreement, will acquire all issued and outstanding shares of Egersund Net (the "EN Shares") from Egersund Group, based on an enterprise value of Egersund Net of NOK 742,256,000, subject to customary net debt and working capital adjustments to reach the final equity value of the transaction (the "Consideration") (the "Transaction"). The Transaction will be settled partly in cash (29.3% of the Consideration) and partly by way of the Seller Credit to be converted into 7,500,000 Consideration Shares (70.7% of the Consideration). The Cash Consideration will be funded by existing short term credit facilities. The Transaction is expected to be completed on or about 31 August Completion of the Transaction is subject to satisfaction or waiver of customary completion conditions, including the conditions listed in section "Completion Conditions". The unaudited pro forma condensed combined financial information (the "Unaudited Pro Forma Financial Information") has been prepared assuming the Transaction will be completed. The Transaction will exclude properties and some shareholdings currently held directly or indirectly by Egersund Net which post completion of the Transaction will be leased to AKVA on estimated market terms. The leasing of the properties is a condition to closing of the Transaction. The following assets and liabilities will be demerged from Egersund Net prior to completion of the Transaction: 100% of Egersund Net's shareholdings in Egersund Garymenkul (99% of the shares); Egersund Rørvik Eiendom AS (50% of the shares) and in Egersund Trading Eiendom AS (100% of the shares); the EN Group's properties in Kristiansund municipality, Austevoll municipality and Brønnøysund municipality as well as Egersund Trading's property in Austevoll municipality; and short term debt of NOK 95 million that is related to the abovementioned properties. Further, as a condition for completion of the Transaction, the EN Group's building in Radøy municipality (Manger) will be sold to AS Fiskenett (a company in which Egersund Group has an indirect ownership interest), and the property in Tauragé, Lithuania, will be transferred to Egersund Group or a whollyowned subsidiary of Egersund Group after completion of the Transaction. For additional information on the acquisition of Egersund Net and the Transaction Agreement, please refer to section 3 "Description of the Transaction" and section 3.5 "The Transaction Agreement". 7.2 Purpose of the Unaudited Pro Forma Financial Information The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only to show how the acquisition of Egersund Net, described above, might have affected AKVA's consolidated income statement for 2017 if the acquisition occurred on 1 January 2017 and the consolidated statement of financial position as of 31 December 2017 if the acquisition had occurred at the balance sheet date. Because of its nature, the Unaudited Pro Forma Financial Information addresses a hypothetical situation and, therefore, does not represent AKVA's actual financial position or results from operations if the transactions had in fact occurred on those dates and is not representative of the financial position or results of operations for any future periods. Investors are cautioned not to place undue reliance on this Unaudited Pro Forma Financial Information. 49

50 The Unaudited Pro Forma Financial Information has been compiled to comply with the requirements in section of the "Continuing Obligations of Stock Exchange Listed Companies" issued by Oslo Børs (Oslo Stock Exchange). The Unaudited Pro Forma Financial Information has been prepared in accordance with Annex II of Regulation (EC) 809/2004. This information is not intended to be in compliance with the pro forma information requirements for any other jurisdiction, including but not limited to the United States. 7.3 Basis for preparation and accounting policies The unaudited pro forma condensed combined income statement for the year ended 31 December 2017 has been compiled based on the audited consolidated financial statements of AKVA and the unaudited financial information for Egersund Net and subsidiaries for the year ended 31 December 2017 prepared for the purpose of this Unaudited Pro Forma Financial Information. The audited consolidated financial statements for AKVA are prepared in accordance with IFRS. No consolidated financial statements have been prepared for Egersund Net for the year ended 31 December 2017 since Egersund Net and its subsidiaries are included in the consolidated financial statements of their parent company, Egersund Group. For the purpose of the unaudited pro forma condensed combined income statement for the year ended 31 December 2017 and the unaudited pro forma condensed combined statement of financial position as of 31 December 2017, an unaudited consolidated income statement and an unaudited consolidated statement of financial position have been prepared for Egersund Net. Underlying the unaudited consolidated income statement and the unaudited consolidated statement of financial position of Egersund Net is certain audited information of the subsidiaries, including: The audited annual financial statements for Egersund Net and Egersund Trading as of and for the year ended 31 December 2017, which are prepared in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway ("NGAAP"). These financial statements have been audited by Iversen Revisjon AS, reg. no The audited annual financial statements for UAB Egersund Net as of for the year ended 31 December 2017, which are prepared in accordance with Lithuanian business accounting standards ("LBAS"). These financial statements have been audited by Scandinavian Accounting and Consulting UAB. The unaudited consolidated financial statements of Egersund Net have been adjusted to reflect any differences between the applied GAAP and IFRS. See note 2 for further information. 70% of the shares in Grading Systems (UK) Limited was acquired by Egersund Net in 2018 for a total of NOK 29,500,000. Due to the relative size of Grading Systems (UK) Limited, the figures are not included in the unaudited pro forma condensed combined income statement for the year ended 31 December 2017 or in the unaudited pro forma condensed combined statement of financial position as of 31 December The presentation currency in the audited annual financial statements for UAB Egersund Net is Euro. For the purpose of the consolidation of the Egersund Net group, the average EUR/NOK exchange rate in 2017 (9.33), is used when translating income statement information. The EUR/NOK exchange rate as per 31 December 2017 (9.84) is applied for statement of financial position information. The Unaudited Pro Forma Financial Information does not include all of the information required for financial statements under International Financial Reporting Standards ("IFRS"), and should be read in conjunction with the historical information of AKVA. The unaudited pro forma condensed combined income statement is prepared in a manner consistent with the accounting policies of AKVA (IFRS as adopted by EU) applied in AKVA will not adopt any new policies in 2018 as a result of the acquisition or otherwise, with the exception of IFRS 9 and IFRS 15 which will be adopted 1 January IFRS 9 sets out the requirements for classification and measurement of financial instruments, impairment and hedge accounting. The adoption of IFRS 9 has no effect for AKVA. AKVA 50

51 implemented IFRS 15 retrospectively with the cumulative effect recognized at the date of initial application (1 January 2018), and the net of tax effect recognized directly to equity as of 1 January 2018 is NOK 1.8 million. As a result, AKVA will not apply the requirements of IFRS 15 to comparative period presented. Please refer to the financial statements for 2017 for description of the accounting policies and changes to accounting policies following the implementation of IFRS 15 from 1 January The Unaudited Pro Forma Financial Information has been prepared under the assumption of going concern. The following tables set out Unaudited Pro Forma Financial Information for the Group as of and for the year ended 31 December 2017 and is prepared under the assumption that the Transaction will close as described. 7.4 Unaudited pro forma condensed combined income statement for the year ended 31 December 2017 The table below sets out the unaudited pro forma condensed combined income statement for the year ended 31 December 2017, as if the Transaction had been completed on 1 January As the unaudited pro forma figures (included in the column "Pro forma combined" in the table below) do not include adjustments for nonrecurring items or figures from Grading Systems Ltd., the presented Revenue and EBITDA deviates from the figures reported in the stock exchange notice published on 28 June NOK 000 AKVA Group IFRS Egersund Net Consolidated NGAAP (1) IFRS adjustments Pro forma adjustments Notes Pro forma combined OPERATING REVENUES Revenues , Other income Total revenues OPERATING EXPENSES Cost of materials , Payroll expenses Other operating expenses , Total operating expenses Result from associated companies EBITDA Depreciation and amortization , OPERATING PROFIT (EBIT) Financial income Financial expenses Net financial income (expense) PROFIT BEFORE TAX Taxes NET PROFIT FOR THE YEAR

52 The notes to the Unaudited Pro Forma Financial Information are an integral part of the unaudited pro forma statement information. 7.5 Unaudited pro forma condensed combined statement of financial position as of 31 December 2017 The table below sets out the unaudited pro forma condensed combined statement of financial position as of 31 December 2017, as if the Transaction had been completed on 31 December NOK 000 AKVA group Egersund Net Consolidated IFRS Pro forma Pro forma IFRS NGAAP (1) adjustments adjustments Notes combined NONCURRENT ASSETS Deferred tax asset Goodwill Other intangible assets Total intangible assets and goodwill Land and building Machinery and equipment Total tangible fixed assets Investments in associated companies Other longterm financial assets Total longterm financial assets Total noncurrent assets CURRENT ASSETS Inventory Accounts receivables Prepayments to suppliers Other receivables , Total receivables Cash and cash equivalents Total current assets TOTAL ASSETS EQUITY Share capital Share premium Other equity Noncontrolling interests TOTAL EQUITY , LIABILITIES Deferred tax liabilities Liabilities to financial institutions Other long term liabilities Total noncurrent liabilities Liabilities to financial institutions Trade payables Current tax payables Public duties payable Prepayments from customers Other current liabilities , Total current liabilities Total Liabilities

53 TOTAL EQUITY AND LIABILITIES The notes to the Unaudited Pro Forma Financial Information are an integral part of the unaudited pro forma statement information. 7.6 Notes to the Unaudited Pro Forma Financial Information Egersund Net and Egersund Trading has historically presented its statutory financial statements in accordance with NGAAP. UAB Egersund Net has historically presented its statutory financial statements in accordance with LBAS. In connection with the compilation of the Unaudited Pro Forma Financial Information, differences between IFRS and local GAAP were identified, and the resulting adjustments are presented in a separate column in the table above and described in the notes below. When applicable, the adjustments related to Unaudited Pro Forma Financial Information are shown separately in each note below. All amounts are expressed in NOK thousand unless otherwise specified. 1) Unaudited historical financial information for Egersund Net 2017 The unaudited consolidated figures include the parent company, Egersund Net, and the whollyowned subsidiaries Egersund Trading and UAB Egersund Net. The associated companies, Nofi Oppdrettsservice AS and Emel Balik Agi A.ş, are presented according to the equity method. The presentation currency in the unaudited consolidated figures is NOK and the average EUR/NOK exchange rate in 2017 is applied when translating the figures from UAB Egersund Net. The below table outlines the unaudited consolidated income statement for Egersund Net, including elimination of intragroup transactions and carveout adjustments as further described below. Assets UAB excluded Egersund Egersund Eg. Net (i) UAB Eg.Net Eliminations Transaction consolidated from EN Group NOK 000 Net 1 Trading 1 (EUR) (NOK) Revenue Cost of goods sold Gross profit Personnel expenses Other operating expenses Result from associated companies EBITDA Depreciation and amortisation EBIT Financial income Financial expenses EBT Taxes Net profit (i) Some reclassifications are performed to the income statement in order to harmonise the presentation across the entities within the group. There are no deviations between revenue, EBITDA, EBIT or Net profit in the table above compared to the audited financial statements. 53

54 Eliminations Intragroup transactions mainly comprise the sale and purchases between Egersund Net and UAB Egersund Net in relation to the assembly of fish farming nets, which is performed in Lithuania. The NOK 0.5 million elimination of financial income is related to dividend received from Nofi Oppdrettsservice AS. Assets excluded from Transaction Prior to completion of the Transaction, the properties and shares of the Egersund Net group have been or will be demerged as described in section 7.1. Since these properties and shares are not part of the Transaction, these are excluded from the historical financial information for the Egersund Net group. The adjustment of NOK 4.9 million reflects the expensed depreciation on these properties in Short term debt of NOK 95 million will be included in the demerger. The corresponding interest expenses of NOK 2.6 million (2.7 %) is adjusted for in the unaudited consolidated income statement. The table below sets out a summary of the unaudited consolidated balance sheet of Egersund Net, including elimination of intercompany balances and assets excluded from the Transaction. The EUR/NOK exchange rate as per 31 December 2017 is applied when translating the balance sheet of UAB Egersund Net. UAB Eg.net (EUR) UAB Eg.net (NOK) Assets excluded from Transaction NOK 000 Egersund Net Egersund Trading Eliminations EN Consolidated Intangible assets Deferred tax asset Goodwill Land and buildings Fixed assets Shares in subsidiaries Shares in associates Other financial assets Group loans and receivables Inventory Accounts receivables Other receivables Cash and bank deposits Total assets Equity Longterm debt Overdraft facility Group loans and payables Accounts payable Public duties payable Tax payable Provision for tax claim Other current liabilities Total equity and liabilities Eliminations The carrying amount of Egersund Net's investment in the subsidiaries Egersund Trading and UAB Egersund Net is NOK 4 million. Other eliminations of NOK 0.2 million and NOK 10 million are related to intercompany balances as per 31 December

55 Assets excluded from Transaction Prior to completion of the Transaction, the properties and shares of the Egersund Net group have been or will be demerged as described in section 7.1. Since these properties and shares are not part of the Transaction these are excluded from the historical financial information for Egersund Net. The adjustment of NOK 79 million is the total carrying amount of the properties while the adjustment of NOK 2.5 million reflects the corresponding deferred tax asset related to these properties. NOK 95 million represents the corresponding debt, which will be part of the demerger. The adjustments of NOK 3.7 million and NOK 7.0 million represent the carrying amount of the shares in Egersund Garymenkul LTD and Egersund Rørvik Eiendom AS, both to be carvedout by way of a demerger. The cash adjustment of NOK 5.9 million represents the consideration to be received from Egersund Group AS, resulting from the sale of the property in Radøy municipality (Manger). 2) IFRS adjustments In accordance with NGAAP, goodwill is amortised over the expected useful life. The depreciation method used shall reflect the pattern of the goodwill's future economic benefits. Goodwill is assessed for impairment in accordance with the Accounting Act and NRS (F) Impairment of fixed assets. Under IFRS goodwill is not amortised. Instead, goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, in accordance with IAS 36. The IFRS adjustment of NOK 0.7 million is related to goodwill depreciation included in the financial statements of Egersund Net AS and Egersund Trading AS. Pro forma adjustments 3) Eliminations AKVA and Egersund Net Transactions and balances between AKVA and the Egersund Net group in 2017 are eliminated in the unaudited pro forma condensed combined income statement and in the unaudited pro forma condensed combined statement of financial position. Transactions between AKVA and the Egersund Net group amounts to NOK 16 million, while the balances amounted to NOK 2.8 million as of 31 December These transactions and balances include sales and purchases between AKVA and Egersund Net and Egersund Trading, and are eliminated to present the effect as if the transaction occurred on 1 January Intra group debt between Egersund Net and Egersund Group is intended settled with Egersund Group on or immediately after completion of the Transaction. These pro forma adjustments will have continuing impact. 4) Purchase Price Allocation adjustments AKVA has for the purposes of the Unaudited Pro Forma Financial Information performed a preliminary purchase price allocation in accordance with IFRS 3, and AKVA's accounting policy is to account for such transactions at fair value. This allocation has formed the basis for the amortization and depreciation charges in the unaudited pro forma condensed combined income statement and the presentation in the unaudited pro forma condensed combined statement of financial position. The final allocation may significantly differ from this allocation and this could materially have affected the depreciation and amortization of excess values in the unaudited pro forma condensed combined income statement and the presentation in the unaudited pro forma condensed combined statement of financial position. The purchase price allocation (PPA) is presented in the table below: NOK 000 Purchase Price Allocation (i) Total value of Shares including cash consideration Fair value of noncontrolling interest

56 Equity Egersund Net (31 March 2018) Excess value Add: BV existing intangible assets Less: FV Customer relationships Less: FV Brand name Less: FV Order backlog Less: FV Machinery and equipment Less: FV Investments Less: FV Assets held for sale Add: FV Onerous Contracts Add: FV Other provisions and liabilities Add: Deferred tax generated by purchase accounting adjustments Goodwill Depreciation on excess values Onerous contract (Revenue) Onerous contract (Cost of materials) Order backlog Tax effect (ii) Net profit effect from PPA (i) The purchase price allocation is based on balance sheet figures as per 31 March (ii) The tax effect reflects estimated changes in deferred tax. These pro forma adjustments will have continuing impact. 5) Transaction costs, financing and equity NOK 525,000,000 of the purchase price will be settled in the form of a seller's credit that will be converted into shares in AKVA. AKVA's extraordinary general meeting to be held on 14 August 2018 will resolve the issue of 7,500,000 Consideration Shares with a nominal amount of NOK 1 per share and a subscription price of NOK 70 per share. The estimated Cash Consideration of NOK million will be funded by existing shortterm credit facilities. The shortterm credit facility carries an interest rate of 3 months Nibor and a margin of 1.3%. The interest expense of NOK 3.6 million has been included in the unaudited pro forma condensed combined income statement, and the increased credit balance of NOK million has been included in shortterm debt to credit institutions in the unaudited pro forma condensed combined statement of financial position. These pro forma adjustments will have continuing impact. The total transaction costs are estimated to NOK 8.6 million. These are not tax deductible and are expensed in the unaudited pro forma condensed combined income statement and included in the unaudited pro forma condensed combined statement of financial position as other current liabilities. This pro forma adjustment will not have continuing impact. 6) The following table shows the breakdown of the pro forma adjustment on equity: NOK 000 Pro forma adjusted equity Share capital Issuance of consideration shares Elimination of share capital in EN Group Total share capital Share premium 56

57 Issuance of consideration shares Elimination of share premium in EN Group Total share premium Other equity Elimination of share capital issuance of consideration shares Elimination of debt financing of shares Share capital in EN Group Share premium in EN Group Excess values and goodwill PPA Provisions and liabilities PPA Transaction costs Total other equity and NCI Total pro forma adjusted equity ) Demerged assets and liabilities postclosing of the Transaction and leasing of properties As described in 7.1, the demerger of UAB Egersund Net's properties in Taurage, Lithuania will be finalised after completion of the Transaction. The carrying amount of the property of NOK 34.5 million and the corresponding debt of NOK 12.4 million are adjusted for as a pro forma adjustment. In addition, the lease expenses of the property of NOK 3.8 million in 2017 are included as an adjustment in the unaudited pro forma condensed combined income statement. These lease expenses are based upon the post transaction lease agreement. The lease back of the property is a condition for completion of the Transaction. These pro forma adjustments will have continuing impact. An adjustment of NOK 12.2 million reflects the agreed annual leasing expenses related to the demerged properties in Austevoll, Kristiansund, Brønnøysund and Radøy. All the properties will be leased back to Egersund Net. 8) Tax The IFRS and pro forma adjustments are charged with the applicable statutory tax rate. For 2017 the statutory tax rate applicable at year end was 24%. These pro forma adjustments will have continuing impact. 7.7 Independent Assurance Report on the Unaudited Pro Forma Financial Information With respect to the Unaudited Pro Forma Financial Information included in this Information Memorandum, KPMG AS has applied assurance procedures in accordance with ISAE 3420 Assurance Engagement to Report on Compilation of Pro Forma Financial Information Included in a Prospectus in order to express an opinion as to whether the Unaudited Pro Forma Financial Information has been properly compiled on the basis stated, and that such basis is consistent with the accounting policies of the Company; see Appendix A (Independent Practitioner's Assurance Report on the Compilation of ProForma Financial Information included in an Information Memorandum). 57

58 8 CAPITAL RESOURCES 8.1 Sources of cash flow AKVA Historical cash flow analysis Cash flow (consolidated) for the three month period ended 31 March 2018 (unaudited) compared with the three month period ended 31 March 2017 (unaudited) Cash flows from operating activities for the three month period ended 31 March 2018 amounted to NOK 92 million compared to a cash flows from operating activities of NOK 32 million for the three month period ended 31 March The increase was primarily due an increase in prepayments from customers, partly offset by increase in stock and trade receivables. The cash flows from investing activities for the three month period ended 31 March 2018 amounted to NOK 23 million compared to NOK 23 million in cash flows from investing activities for the three month period ended 31 March Cash flow from investment activities is on same level as last year. The cash flows from financing activities for the three month period ended 31 March 2018 amounted to NOK 56 million compared to NOK 20 million in cash flow from financing activities for the three month period ended 31 March The decrease was primarily due to repayments of short term borrowings and increased dividend payments. Net increase in cash and cash equivalents for the three month period ended 31 March 2018 was NOK 13 million compared to a net decrease of NOK 35 million the three month period ended 31 March This is as a result of the above mentioned changes Cash flow (consolidated) for the year ended 31 December 2017 (audited) compared with the year ended 31 December 2016 (audited) Cash flows from operating activities for the year ended 31 December 2017 amounted to NOK 87 million compared to a cash flows from operating activities of NOK 212 million for the year ended 31 December The decrease was primarily due to increased stock and trade receivables. The cash flows from investing activities for the year ended 31 December 2017 amounted to NOK 117 million compared to NOK 260 million in cash flows from investing activities for the year ended 31 December The increase was primarily due to two major acquisitions of subsidiaries in 2016, partly offset by higher investment in fixed assets in The cash flows from financing activities for the year ended 31 December 2017 amounted to NOK 22 million compared to NOK 106 million in cash flow from financing activities for the year ended 31 December The decrease was primarily due to refinancing of long term debt with repayment of loans and increased dividend to shareholders in Net decrease in cash and cash equivalents for the year ended 31 December 2017 was NOK 52 million compared to a net increase of NOK 57 million for the year ended 31 December This is as a result of the above mentioned changes Cash flow (consolidated) for the year ended 31 December 2016 (audited) compared with the year ended 31 December 2015 (audited) Cash flows from operating activities for the year ended 31 December 2016 amounted to NOK 212 million compared to a cash flows from operating activities of NOK 96 million for the year ended 31 December The increase was primarily due to increased prepayments from customers and increase in trade payables. 58

59 The cash flows from investing activities for the year ended 31 December 2016 amounted to NOK 260 million compared to NOK 116 million in cash flows from investing activities for the year ended 31 December The decrease was primarily due to acquisition of two subsidiaries. The cash flows from financing activities for the year ended 31 December 2016 amounted to NOK 106 million compared to NOK 74 million in cash flow from financing activities for the year ended 31 December The increase was primarily due to proceeds from borrowings. Net increase in cash and cash equivalents for the year ended 31 December 2016 was NOK 57 million compared to a net increase of NOK 54 million for the year ended 31 December This is as a result of the above mentioned changes. 8.2 Debt overview AKVA Liquidity and funding (all figures in NOK thousand) Longterm liabilities due in more than 5 years 31 March Liabilities to financial institutions Total March Liabilities secured with assets Guarantee liabilities Assets pledged as security for debt: 31 March Accounts receivable Inventory Shares in subsidiaries Other assets Total Repayment of debt In October 2017, AKVA refinanced the longterm debt in Danske Bank into two new loans, each in the amount of NOK 125 million and with 3 and 5 years duration, as well as increasing the overdraft facility from NOK 90 million to NOK 200 million, and establishing a new NOK 200 million revolving credit line. The Group's interest bearing liabilities of NOK million at 31 December 2017 consist of two bank loans to Danske Bank with carrying amount NOK million, utilization of overdraft facility of NOK 99.5 million, financial lease liabilities of NOK million, liability to Hitra Kommune of NOK 7.2 million and NOK 1.5 million to other financial institutions. As of 31 March 2018, the utilization of the overdraft facility was of NOK 67.8 million and financial lease liabilities of NOK million. (all figures in NOK thousand) The Groups' longterm debt matures as follows: 31 March

60 or later Total longterm debt Average interest rate 2.30% 2.28% 2.84% As of 31 December 2017, an amount of NOK million of the longterm debt due within one year is, in accordance with IFRS, reclassified to shortterm interest bearing debt in the balance sheet. Loan covenants to Danske Bank In the loan documents from Danske Bank the following financial loan covenants are set: The ratio net interestbearing debt over twelve months rolling EBITDA < 3.50 Equity share for AKVA > 25% Equity in NOK for AKVA > 300 million Net interest bearing debt over twelve months rolling EBITDA was 1.5 as of 31 December The equity ratio in AKVA was 30% and equity was NOK 500 million as of 31 December The Group was compliant with all covenants as of 31 December 2017 and as of 31 March The terms for the interest bearing debt are based on market conditions. The interest rate is a floating rate and it is based on NIBOR + a margin Egersund Net debt and financing arrangement Following completion of the PreCompletion Transactions (see section above), the debt of EN Group will mainly consist of an overdraft facility of approximately NOK 25 million and group loans from Egersund Group of approximately NOK 50 million. Such debt is intended paid off and settled with Egersund Group on or immediately after completion of the Transaction. Prior to completion of the Transaction, Egersund Net has been included in a cash pool arrangement of Egersund Group, under which the assets of the subsidiaries of Egersund Group (including the assets of Egersund Net) have been deposited as securities for the EG Group's loans. As of 31 December 2017 and 2016, the book value of the assets pledged as security by Egersund Net was as follows: (all figures in NOK) (Book value) Tangible assets Inventories Accounts receivables Shares in subsidiaries Total assets pledged as security After completion of the Transaction, Egersund Net will be included in AKVA's cash pool arrangement (overdraft facility). For further information about the overdraft facility, see section above. 60

61 8.3 Working capital statement The Board is of the opinion that the working capital of the Group is sufficient for the Group's present requirements in a twelve months perspective as from the date of this Information Memorandum. 61

62 9 MARKET OVERVIEW 9.1 General aquaculture market development The Company operates within the global aquaculture service market, through supplying technology solutions and service to companies operating with key species within aquaculture, and is thus exposed to the global aquaculture industry. The products and services offered by the Company enables farmers with almost all equipment needed for farming of fish both in sea and on land. Egersund Net is a supplier of nettechnology, services and equipment to the aquaculture industry, to be acquired by the Company. Nets are installed in net pens in the sea to retain the fish within the cage and require ongoing monitoring, service and cleaning to sustain fish welfare and prevent escapees. The products and services delivered through both the Company and Egersund Net depend on the growth in the aquaculture industry which again is dependent on the supply and demand developments for fish protein Market development aquaculture Assuming consumption per capita stays constant, the projected global population growth alone implies a 35% increase in demand for protein in All but 2% of total food production is produced on land even though 70% of the earth's surface is water. This makes resources for increased land based protein scarce, and means that fisheries and aquaculture are the primary industries to satisfy the increased need for food in the future. Million tonnes, LW e 2025e Wild capture for human consumption Aquaculture for human consumption Farmed Atlantic Salmon Population rebased Figure 1 Historical and future seafood available for human consumption Source: FAO (2013), OECD (2016), World Bank (2013) Over the past few decades, there has been a considerable increase in total and per capita fish supply. As the fastest growing animalbased food producing sector, aquaculture is a major contributor to this, and it outpaces population growth. Great progress in breeding technology, system design and feed technology in the second half of the twentieth century has enabled the expansion of commercially viable aquaculture across species and in volume. In 2015, aquaculture accounted for half of all fish supplies destined for direct human food consumption. Going forward the development in wild capture is projected to be fairly flat, while aquaculture is expected to grow ~20% by 2025 and ~90% by The most industrialised specie within aquaculture is Atlantic salmon. It is also the one with the lowest level of production risk compared to other seafood species, and is the specie the Company is most exposed to (~85% of revenue relates to Atlantic salmon). Key conditions for Atlantic salmon production are sea water temperature 62

63 and currents. This sets natural limitations on where it is possible to farm salmon in the sea. Over the last five years, Norway have accounted for 54%, Chile for 25%, UK for 7%, Canada for 6%, Faroe Island for 4% and others for 5% of the global production for Atlantic salmon. Not suited for salmon farming Figure 2 Few coastlines feasible for salmon farming Source: Pareto Together with favourable conditions, governmental concessions, access to salmon ova and equipment such as cages, nets, feed barges and systems, and technology solutions is needed to produce Atlantic salmon. Currently most areas in the sea suitable for salmon farming with today's technology is utilized, and growth will come from better productivity within current areas and use of new areas such as offshore and land based farming Market drivers The total supply of salmonids in 2017 was around ~3.5m tonnes, whereof 2.5m tonnes were farmed salmonids. Atlantic salmon is the largest of the farmed salmon species, with 2.2m tonnes. Further, this is a specie which is expected to show growth in the next years, reaching 2.7m tonnes in The amount of wild salmon has been fairly flat the last 15 years, with yearly volumes around 0.9m tonnes. It should however be noted that a large part of the wild salmon (more than 50%) is of lower quality than Atlantic salmon and is not a direct competitor. Farmed and wild salmon supply e (1,000 tonnes) 3,500 3,000 2,500 2,000 1,500 1, Wild salmon catch Total farmed salmon Figure 3 Development in farmed and wild salmon supply Source: Pareto, Kontali 2018 salmon production per country 1 % 1 % 3 % 1 % 2 % 1 % 6 % 7 % 54 % 25 % Norway Chile UK Canada Faroes USA Ireland Australia Iceland Other 63

64 As expressed, there is a large need for protein and sustainable food production going forward. There is a continued strong outlook for salmon demand, especially driven by Asia, US and other emerging markets in Americas. Consumption per capita is still low in these markets, which is expected to increase due to a growing attention to healthy food and better purchasing power. The increase in salmon price experienced in recent years is another indicator for the firm demand. Since 2010, the salmon price has had an annualised increase of 7%, the same as salmon supply. This increase in prices is a clear indication that demand is solid, and that consumers are willing to pay for its salmon. It is expected to be more stable prices going forward, which eventually will translate into predictable retail prices, which again should trigger higher demand. NOK/kg Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Figure 4 Salmon price FCA Oslo Source: Fishpool With the positive growth outlook for the salmon industry with regards to both supply and demand, it is expected that prices will stay at high levels. This also suggests a strong outlook for the salmon service and supply industry. With high salmon prices, investments tend to rise as salmon farmers seek to capitalise and make strategic investments when cash flows are strong. Historically, investments have increased the year after a salmon price increase and decreased a year after a salmon price decrease. In recent years the salmon price has established itself at a higher level, while investments have become larger and more diversified. Large investments in sea plants, facilities on land and transport equipment have been more prominent in later years. NOKm / k tonnes NOK/kg Capex sea and equipments (lhs) Harvest volumes Norway (lhs) Salmon price (rhs) Figure 5 Investments in the salmon industry Source: Directorate of Fisheries, Kontali 64

65 9.2 The equipment and service market for aquaculture The Company's core market relates to the equipment and service industry within aquaculture. The Company is currently exposed to almost all submarkets within this space, that being with regards to technology and equipment needed to farm fish both on land and in sea. Before salmon is put to sea to grow out to harvest size, smolt is produced on land. In such facilities, tanks, water inflow and outflow systems, recirculation systems for treating the water, feed systems and highend software systems are among the equipment needed for safe and efficient smolt production. Historically, smolt has been put to sea at approximately 100 grams. The trend over the latest years however, has been to produce even bigger smolt before releasing them in the sea, and then keeping the fish in the sea for a shorter amount of time. This is a result of higher cost in relation to treating fish for deceases and parasites, and in some salmon producing regions to increase volume. This requires capital intensive construction and expansions of facilities, meaning increased demand for land based equipment and service. Further, farmers are exploring opportunities to grow out the fish, both salmon and other species, entirely on land. All this to increase volumes in order to meet the strong demand for seafood protein. It has also been observed a trend in fullscale production on land, due to the lack of new areas for traditional farming. The technology needed for fullscale salmon production on land, is the same technology that are being used for smolt production. Thus, there is a positive market outlook for land based systems going forward. Supportive for the Company is also the low number of fully integrated suppliers within the land based equipment market, placing the Company in a strong position to supply all from single components to complete solutions. Average smolt size (grams) e 2019e 2020e 2021e Long term Figure 6 Smolt size in Norway Source: Kontali, Pareto To farm fish in the sea top quality equipment is essential to secure stable production and fish welfare. Cages, nets, monitoring systems, feed barges and feed systems, as well as service boats and equipment are among key components in seafood farming. As salmon spend months in the sea, depending on smolt size and temperatures, ensuring optimal conditions is a necessity for efficient farming. To reduce mortalities originating from deceases and parasites, an increased focus on more advanced equipment has emerged. This is also driven by new regulations from the government, such as the NYTEK regulation implemented in The strong earnings within the salmon sector has seen the last couple of years have also increased the focus on maximizing production volumes, which again has increased demand for both equipment and services provided to do so. 65

66 Over the last years there has also been a trend for larger cages, as this makes the operations more cost efficient. This also drives demand for larger and more advanced service vessels, cage cleaning system and feed barges/feed systems. The continued tougher regulations also increase demand for services such as diving services to prevent escapes and sea lice treatments to stay within the government decided sea lice limits. Development in # of cages and harvest volumes in Norway # of cages in use (lhs) Production volumes 1,000 tonnes WFE (rhs) Figure 7 Number of cages and harvest volumes in Norway Source: Kontali, Directorate of Fisheries Another trend within the salmon industry is to move production further offshore, and into closed/semiclosed systems in the fjords. This is a result of a license scheme launched by the government to encourage research and development in new production methods. So far more than 100 different projects have applied for licenses, which are needed to start up the projects. These projects will likely increase demand for even more advanced services and equipment, which both AKVA and Egersund Net are in good positions to take advantage of. Figure 8: Pictures of different concepts applying for development licenses Source: Atlantis Subsea Farming, Grieg Seafood 66

67 10 ADDITIONAL INFORMATION 10.1 Documents on display For the life of this Information Memorandum the following documents (and copies thereof) are available for inspection at the Company's offices and can be downloaded from the Company's website The Company's Articles of Association All reports, letters, and other documents, historical financial information, valuations and statements prepared by any expert at the Company's request any part of which is included or referred to in the Information Memorandum; and The historical financial information of the Company and its subsidiaries for each of the two financial years preceding the publication of this Information Memorandum 10.2 Sources of industry and market data In this Information Memorandum, the Company has used industry and market data obtained from independent industry publications, market research, and other publicly available information. While the Company has compiled, extracted and reproduced industry and market data from external sources, the Company has not independently verified the correctness of such data. Thus, the Company takes no responsibility for the correctness of such data. The Company cautions prospective investors not to place undue reliance on the above mentioned data. The Company confirms that where information has been sourced from a third party, such information has been accurately reproduced and that as far as the Company is aware and is able to ascertain from information published by that third party, no facts have been omitted that would render the reproduced information inaccurate or misleading. Where information sourced from third parties has been presented, the source of such information has been identified Cautionary note regarding forwardlooking statements This Information Memorandum includes forwardlooking statements that reflect the Company's current views with respect to future events and financial and operational performance. These forwardlooking statements may be identified by the use of forwardlooking terminology, such as the terms "anticipates", "assumes", "believes", "can", "could", "estimates", "expects", "forecasts", "intends", "may", "might", "plans", "projects", "should", "will", "would" or, in each case, their negative, or other variations or comparable terminology. These forwardlooking statements are not historic facts and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, financial strength and position of the Company, operating results, liquidity, prospects, growth, the implementation of strategic initiatives, as well as other statements relating to the Company's future business development and financial performance, and the industry in which the Company operates. Prospective investors in the Shares are cautioned that forwardlooking statements are not guarantees of future performance and that the Company's actual financial position, operating results and liquidity, and the development of the industry in which the Company operates, may differ materially from those made in, or suggested, by the forwardlooking statements contained in this Information Memorandum. The Company cannot guarantee that the intentions, beliefs or current expectations upon which its forwardlooking statements are based will occur. 67

68 By their nature, forwardlooking statements involve, and are subject to, known and unknown risks, uncertainties and assumptions as they relate to events and depend on circumstances that may or may not occur in the future. Because of these known and unknown risks, uncertainties and assumptions, the outcome may differ materially from those set out in the forwardlooking statements. The information contained in this Information Memorandum, including the information set out under section 1 "Risk Factors", identifies additional factors that could affect the Company's business, financial condition, results of operations, cash flows, liquidity and performance. Prospective investors in the Shares are urged to read all sections of this Information Memorandum and, in particular, section 1 "Risk Factors" for a more complete discussion of the factors that could affect the Company's future performance and the industry in which the Company operates when considering an investment in the Company. These forwardlooking statements speak only as at the date on which they are made. The Company undertakes no obligation to publicly update or publicly revise any forwardlooking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forwardlooking statements attributable to the Company or to persons acting on the Company's behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this Information Memorandum Incorporation by reference The information incorporated by reference in this Information Memorandum shall be read in connection with the crossreference list as set out in the table below. Except as provided in this section 10.4, no other information is incorporated by reference into this Information Memorandum. Section in Information Memorandum Disclosure requirements of the Information Memorandum Reference document and link Page in reference document Section 5 Audited historical financial information AKVA group ASA annual report 2017: 27 AKVA group ASA annual report 2016: 26 AKVA group ASA annual report 2015: 23 Section 5 Audit report AKVA group ASA auditors report 2017: AKVA group ASA auditors report 2016: AKVA group ASA auditors report 2015: 85 Section 5 Accounting policies AKVA group ASA annual report 2017:

69 11 DEFINITIONS AND GLOSSARY TERMS AKVA or Company: Articles of Association: Atlantis Shares: Board or Board of Directors: CEO: AKVA group ASA, a public limited liability company incorporated under the laws of Norway with business registration number The articles of association of the Company, as amended and restated from time to time The shares in Atlantis Subsea Farming AS, see section and above. The board of directors of the Company, as constituted from time to time Chief Executive Officer Cash Consideration: The cash consideration to be paid by AKVA to Egersund Group for the EN Shares representing 29.3% of the Consideration. Consideration: Consideration Shares: Continuing Obligations: Corporate Governance Code: Egersund Net: EN Group: The consideration to be paid by AKVA to Egersund Group for the EN Shares which is based on an enterprise value of NOK 742,256,000, subject to customary net debt and working capital adjustments to reach the final equity value of the Transaction. The 7,500,000 shares in AKVA, each with a par value of NOK 1 per share and a subscription price of NOK 70 per share, to be issued to Egersund Group on completion of the Transaction. The Oslo Børs' Continuing Obligations for stock exchange listed companies The Norwegian Code of Practice for Corporate Governance published on 30 October 2014 by the Norwegian Corporate Governance Board Egersund Net AS, a private limited liability company incorporated under the laws of Norway with business registration number Following completion of the Transaction, Egersund Net will be a whollyowned subsidiary of AKVA. Egersund Net and the companies in which Egersund Net, following completion of the Transaction, will have a direct or indirect ownership interest: Egersund Trading AS, business reg. no UAB Egersund Net, business reg. no Nofi Oppdrettsservice AS, business reg. no Grading Systems (UK) Limited, business reg. no. SC Emel Balik ve Balik Agi Tur. Gida lth.lhr.san.tic.ltd.sti, business reg. no Atlantis Subsea Farming AS, business reg. no Blue Planet AS, business reg. no Blue Farm AS, business reg. no EN Share(s): Egersund Group or Seller: EG Group: EUR: EY: Forwardlooking statements: IFRS: Shares in the share capital of Egersund Net, each with a par value of NOK 5,000, or any one of them Egersund Group AS, a private limited liability company incorporated under Norwegian law, with business registration number Egersund Group AS and its consolidated subsidiaries. EURO, the currency introduced at the start of the third stage of the Economic and Monetary Union to the Treaty establishing the European Economic Community, as amended by the Treaty on the European Union Ernst & Young AS Statements made that are not historic and thereby predictive as defined in Section 10.3 of this Information Memorandum. Such statements are identified by forwardlooking terms such as "aim", "expect", "believe", "plan", "intend", "estimate", "anticipate", "may", "will" and "could" or similar words or phrases International Financial Reporting Standards as adopted by the EU 69

70 Information Memorandum: This information memorandum dated 23 July 2018 ISIN: KPMG: LBAS: Securities number in the Norwegian Registry of Securities (VPS) KPMG AS; the Company's statutory auditor Lithuanian business accounting standards Long Stop Date: 31 December 2018 Management: NGAAP: NOK: Norwegian Securities Trading Act: Oslo Børs: PreCompletion Transactions: Seller Credit: Share(s): Transaction: The executive management of the Company The Norwegian Accounting Act and accounting standards and practices generally accepted in Norway The Norwegian kroner, the lawful currency of the Kingdom of Norway The Norwegian Securities Trading Act of 29 June 2007 no. 75 Oslo Stock Exchange, a regulated market owned and operated by Oslo Børs VPS Holding ASA (see The transactions and carveouts from the EN Group as described in section The seller credit in the amount of NOK 525,000,000 to be issued by Egersund Group to AKVA for the transfer of 350 EN Shares (constituting 70% of the share capital of Egersund Net on a fully diluted basis) from Egersund Group to AKVA, which will be converted to 7,500,000 new shares in AKVA at a subscription price of NOK 70 per share. Shares in the share capital of the Company, each with a par value of NOK 1, or any one of them The Company's acquisition of all the issued and outstanding shares of Egersund Net AS Transaction Agreement: The transaction agreement between AKVA, Egersund Group and Egersund Net, dated 28 June 2018, agreeing, inter alia, to acquire all issued and outstanding shares of Egersund Net AS UK GAAP: Unaudited Pro Forma Financial Information: U.S. or United States: U.S. Securities Act: VPS: UK generally accepted accounting principles The unaudited pro forma condensed combined financial information prepared for illustrative purposes only to show how the Transaction might have affected AKVA's consolidated income statement and consolidated statement of financial position for the periods presented if the Transaction occurred at the earlier dates as set out in section 7. The United States of America The United States Securities Act of 1933, as amended The Norwegian Central Securities Depository (No.: "Verdipapirsentralen"). 70

71 APPENDIX A: INDEPENDENT PRACTITIONER'S ASSURANCE REPORT ON THE COMPILATION OF PROFORMA FINANCIAL INFORMATION

72 KPMG AS Sørkedalsveien 6 Postboks 7000 Majorstuen 0306 Oslo Telephone Fax Internet Enterprise MVA Independent Practitioner s Assurance Report on the Compilation of Unaudited Pro Forma Condensed Combined Financial Information Included in an Information Memorandum Report on the Compilation of Unaudited Pro Forma Condensed Combined Financial Information Included in an Information Memorandum To the Board of Directors of AKVA Group ASA Basis for opinion In accordance with the requirements in section of the Continuing Obligations of Stock Exchange Listed Companies issued by The Oslo Stock Exchange (Continuing Obligations) we have completed our assurance engagement to report on the compilation of unaudited pro forma condensed combined financial information of AKVA Group ASA ("AKVA Group " or the Company ). The unaudited pro forma condensed combined financial information consists of the unaudited pro forma condensed combined statement of financial position as at 31 December 2017, the unaudited pro forma condensed combined statement of income for the year ended 31 December 2017, and related notes as set out in section 7 of the Information Memorandum dated 23 July 2018 (the Information Memorandum ) issued by the Company. The applicable criteria on the basis of which management of the Company has compiled the unaudited pro forma condensed combined financial information are specified in EU Commission Regulation (EC) No 809/2004 which is incorporated in section 713 of the Securities Trading Act (Norway) and as described in the Basis for preparation and accounting policies in section 7 of the Information Memorandum. The unaudited pro forma condensed combined financial information has been compiled by the management of the Company to illustrate the impact of the acquisition of Egersund Net AS ("Egersund Net") set out in section 3 of the Information Memorandum on the Company's financial position as at 31 December 2017 and the results of its operations for the year ended 31 December 2017, as if the transaction had taken place at 1 January AKVA Group s historical financial information is derived from AKVA Group s audited consolidated financial statements for 2017 prepared in accordance with International Financial Reporting Standards as adopted by the EU. Egersund Net s historical financial information is derived from it's consolidated management accounts for 2017 prepared in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway. Management's Responsibilities The Company s management is responsible for compiling the unaudited pro forma condensed combined financial information in accordance with the requirements of the EU Commission Regulation (EC) No 809/2004 as required by the Continuing Obligations. Practitioner's Responsibilities Our responsibility is to express an opinion as required by Annex II, item 7 of EU Commission Regulation (EC) No 809/2004 which is incorporated in the Securities Trading Act (Norway), as to whether the unaudited pro forma condensed combined financial information has been compiled, by management of the Company, on the basis described in the Basis of Preparation to the unaudited pro forma condensed combined financial information and that basis is consistent with the accounting policies of the Company.

73 We conducted our engagement in accordance with International Standard on Assurance Engagements (ISAE) 3420, Assurance Engagements to report on Pro Forma Consolidated Financial Information Included in a Prospectus, issued by the International Auditing and Assurance Standards Board. This standard requires that the practitioner comply with ethical requirements and plan and perform procedures to obtain reasonable assurance about whether management of the Company has compiled the unaudited pro forma condensed combined financial information on the basis described in the basis of presentation. For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the unaudited pro forma condensed combined financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information, including any adjustments made to conform accounting policies, or assumptions used in compiling the unaudited pro forma condensed combined financial information. Our work has consisted primarily of comparing the underlying historical financial information used to combine the unaudited pro forma condensed combined financial information to source documentation, assessing documentation supporting any pro forma and other adjustments and discussing the unaudited pro forma condensed combined information with management of the Company. The purpose of unaudited pro forma condensed combined financial information included in an Information Memorandum is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Company as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction would have been as presented. A reasonable assurance engagement to report on whether the unaudited pro forma condensed combined financial information has been compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by management of the Company in the compilation of the unaudited pro forma condensed combined financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether: The related pro forma adjustments give appropriate effect to those criteria; The unaudited pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information; and The unaudited pro forma financial information has been complied on a basis consistent with the accounting policies of the Company. The procedures selected depend on the practitioner's judgment, having regard to the practitioner's understanding of the nature of the company, the event or transaction in respect of which the unaudited pro forma condensed combined financial information has been compiled, and other relevant engagement circumstances. The engagement also involves evaluating the overall presentation of the unaudited pro forma condensed combined financial information. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 2

74 Opinion In our opinion: a) the unaudited pro forma condensed combined financial information has been properly compiled on the basis stated in section 7 of the Information Memorandum; and b) the basis is consistent with the accounting policies of the Company. This report has been prepared solely in connection with the filing of the Company s Information Memorandum required by Oslo Stock Exchange s Continuing Obligations of Stock Exchange Listed Companies section 3.5 as set out in the Information Memorandum review by Oslo Stock Exchange s. This report is not appropriate for any other jurisdiction or purpose other than for the transaction described in the Information Memorandum. KPMG AS Oslo, 23 July 2018 Svein Arthur Lyngroth State Authorised Public Accountant 3