Q3 218 Presentation Oslo November 2 nd 218 Hallvard Muri, CEO Simon Nyquist Martinsen, CFO
Agenda Highlights Financial performance Outlook Q&A
Highlights Q3 218 by CEO Hallvard Muri
Order Intake development Order intake in Nordic CBT down compared to Q3 217, but four barges signed in October for 8 MNOK Order intake 778 48-18% Barge Supply and Sales Contract signed with Grieg NL Seafarms Ltd, not included in order backlog Included 95 MNOK in order intake from Egersund Net in the quarter (included in numbers from August 3 th ) As decisions for several large Land Based projects in the Nordic region continue to be pushed out in time, segment is down compared to last year 589 561 51 33 546 69 33 13 72 92 42 435 427 421 557 53 33 471 639 45 51 543 471 43 87 342 448 38 376 SW LBT 34 CBT Last twelve months order intake of 2,115 MNOK, compared to 2,471 MNOK full year 217 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18
Backlog driving revenue 2 % organic increase in revenue compared to Q3 217, 32 % increase including Egersund Net Revenue +32% 637 55 Europe & Middle East increased the revenue from 52 MNOK in Q3 217 to 16 MNOK in Q3 218 Americas has another strong quarter with a revenue of 139 MNOK compared to 97 MNOK in Q3 217 Revenue for the Land Based segment with an increase of 49% YoY, ending the quarter with a revenue of 124 MNOK 449 51 537 484 557 589 627 582 Egersund Net is included in the P&L figures from 1.9.218 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Egersund Net
EBITDA with positive development EBITDA of 71 MNOK in the quarter, including 1 MNOK from Egersund Net in September EBITDA +18% 72 Adjusted for 1 MNOK in acquisition costs related to the Egersund Net transaction, EBITDA ended at 72 MNOK in Q3 218 8 1 1 Europe & Middle East EBITDA at 8 MNOK, up from 6 MNOK last year Software with a strong quarter with 1 MNOK in EBITDA, compared to 8 MNOK in Q3 217 24 54 65 61 6 59 52 61 The positive development in the Land Based segment continues with an EBITDA of 13 MNOK compared to 8 MNOK in Q3 217 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Egersund Net Transaction cost
Order backlog development Third quarter 218 Highlights Order backlog Order backlog end of September of 1.1 BNOK -21% Adjusted EBITDA of 72 MNOK in the quarter 1 381 1 318 1 38 1 43 1 274 Dividend of.75 NOK paid out in September 218 Completion of transaction regarding acquisition of Egersund Net 998 412 1 77 43 62 629 537 479 449 1 85 359 Entered into an agreement to divest Wise lausnir ehf Barge Supply and Sales Contract signed with Grieg NL Seafarms Ltd 586 647 698 751 844 951 825 726 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Land Based
Key financial metrics Revenue +71% EBITDA +68% EPS +4% 1 81 1 155 1 531 1 854 18 121 18 182 1,92 1,37 2,81 2,68 215 216 217 218 215 216 217 218 215 216 217 218 YTD YTD YTD Not adjusted for acquisition costs related to the Egersund Net transaction
Where do we deliver AKVA group s geographical regions Income distribution Q3 218 22%(21%) 2%(14%) 58%(65%) Nordic Americas Export AKVA group Agents and Distributors Nordic EME Americas
Development in OPEX based revenue 22 2 18 16 14 12 1 8 6 4 2 28,3% 29,% 28,2% 3 27,1% 26,1% 23,4% 18 25 22,1% 22,5% 31 2 15 146 127 14 145 119 13 141 149 1 5 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 % of total revenue Egersund Net OPEX Based revenue The Marine Service business in Chile developing well and positive outlook for further growth Egersund Net is contributing with 31 MNOK in the quarter Stable development for the rental business (Scotland and Norway) in 218, but several good opportunities for growth in Norway Stable revenue from the Software business, 4 MNOK in Q3 218, compared to 38 MNOK in Q3 217 Lower activity level in the Norwegian marine service business in Q3 218 compared to Q3 217
Revenue by product group and species Software LBT S&AS LBT CBT S&AS CBT 449 4 77 87 244 By product groups Q3 218 By species Q3 218 627 637 627 637 589 42 4 589 55 47 537 557 1 51 537 557 47 52 3 46 51 51 41 46 1 116 124 54 484 54 34 1 484 41 1 18 449 52 28 32 38 46 84 112 124 98 Non seafood 44 83 37 82 14 Other species 38 78 14 99 12 427 456 471 53 526 539 Salmon 367 41 351 37 37 334 279 26 287 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Cage Based technologies = Cages, barges, feed systems and other operational systems for cage based aquaculture S&AS Cage Based = Service and after sales for cage based aquaculture Software = Software and software systems Land Based technologies = Recirculation systems and technologies for land based aquaculture S&AS Land Based = Service and after sales for land based aquaculture Salmon = Revenue from technology and services sold to production of salmon Other species = Revenue from technology and services sold to production of other species than salmon Non Seafood = Revenue from technology and services sold to non seafood customers
Q3 Operational Highlights Continued positive development in Americas / Chile as well as for the Land Based segment Good outlook for Russia with new orders signed in Q3 Pipeline of Land Based projects remains strong but decisions continues to be delayed Norwegian marine service business slower than 217, but activity picked up in Q3 Increased presence in eastern Canada as local Management continue to be supported by Senior Manager and Product Specialists Unexpected operational challenges relating to certain barge projects significantly impacted margins in Nordic/EME in the quarter Egersund integration process developing well
Risk management Underwater feeding 1. Atlantis Subsea Farming AS applied for 6 development licenses the 29th of January 216 2. The Norwegian Directorate of Fisheries have informed the company that the company s concept has progressed another step further in the process to get awarded development licenses. 3. The Directorate will go ahead with processing the application limited to 2 licenses, but have rejected the application in terms of the other 4 permits applied for. 4. On May 9th 217 the company appealed the decision of rejecting the 4 permits. 5. On June 16th 217 the Directorate forwarded the appeal to the Norwegian Ministry of Trade, Industry and Fisheries, for their final decision. 6. On December 18 th 217 The Ministry rejected the appeal. The decision is final and cannot be appealed. 7. On February 22 nd 218, The Directorate announced that the Company has been granted one license. 8. Atlantis Subsea Farming AS is now in a technology testing and planning phase with regards to execution of the project. Submerge and raise the cage safe and remote Fish health operations Daily operations (dead fish removal, surveillance, cleaning, etc) Air to the salmon Artificial air space
Financial performance Q3 218 by CFO Simon Nyquist Martinsen
Q3 218 Financial highlights 2% organic growth, a new quarter with strong contributions from Americas, Europe & Middle East and Land Based Egersund Net is contributing with 55 MNOK in the quarter Last twelve months order intake and revenue now at 2,115 MNOK and 2,41 MNOK respectively 589 51 393 325 Revenue 627 637 557 537 484 449 42 48 355 354 344 The order book has decreased to 1,85 MNOK at the end of Q3 218, which is 295 MNOK lower than at the end of Q3 217 Q1 Q2 Q3 Q4 215 216 217 218
Q3 218 Financial highlights Adjusted for acquisition costs the EBITDA is 72 MNOK in the quarter, and the EBITDA margin is 11,3% Driven by a strong order book revenue is significantly up in Americas and EME, areas with lower relative margins than the Nordic region thus the geographical mix is reducing margins 8 6 4 2 27 EBITDA (MNOK) 65 59 54 52 4 41 43 41 38 Q1 Q2 Q3 215 216 71 61 6 27 24 Q4 217 218 Egersund Net is contributing with a total EBITDA of 1 MNOK in the quarter (one month). The margins in the Land Based segment continues to improve with an EBITDA margin of 1,5% in the quarter compared to 9,1% in Q3 217 15 1 5 1,6% 1,2% 1,1% 1,% 8,2% EBITDA % 1,4% 12,1% 11,4% 1,8% 12,6% 11,1% 8,3% 7,9% 5,3% Q1 Q2 Q3 Q4 1,8%
Cage Based Technologies Nordic Margins impacted by 1 MNOK of acquisition costs in Q3 218, in addition to 8 MNOK in Q2 218 Norwegian barge business with low margins in the quarter due to unexpected and ongoing manufacturing challenges Another strong quarter for Sperre with an EBITDA of 7 MNOK, compared to 5 MNOK in Q3 217 Egersund Net Included in the financials from 1.9.218 with a total revenue of 55 MNOK and an EBITDA of 1 MNOK Egersund Net, Egersund Trading, UAB Egersund Net and Grading System fully consolidated Emel Balik and NOFI Oppdrettsservice is accounted for using the equity method due to ownership of 5% and not controlled by AKVA group 5 45 4 35 3 25 2 15 1 5 Revenue and EBITDA % 12,6% 363 52 93 218 217 Q3 474 16 1,2% 123 245 218 Q3 EBITDA % EME Americas Nordic 14 12 1 8 6 4 2
Cage Based Technologies Americas Americas is significant up and has a growth in the revenue of 43% compared to the same quarter last year, on top of a strong order backlog of 169 MNOK at the end of the quarter Stock notice of signed Sales and Supply Contract with Grieg NFL, not included in order backlog The operation in Chile has a growth in EBITDA of 47% compared to the same quarter last year EME EME has a strong growth in revenue with 16 MNOK in Q3, compared to 52 MNOK in the same quarter last year ASA Export impacted by barge challenges with deliveries to Russia The operations in Turkey, Greece, Spain and Middle East is performing according to plan, and is well positioned for growth in the area 5 45 4 35 3 25 2 15 1 5 Revenue and EBITDA % 12,6% 363 52 93 218 474 16 1,2% 123 245 217 Q3 218 Q3 EBITDA % EME Americas Nordic 14 12 1 8 6 4 2
Land Based Technologies Revenue and EBITDA % Decisions for larger post smolt orders in Norwegian pipeline has been delayed Pipeline of projects continue to be good Strong increase in revenue from 84 MNOK in Q3 217 to 124 MNOK in Q3 218, a growth of 49% YoY Margins are improving quarter by quarter and stronger than full year 217 13 12 11 1 9 8 7 6 5 4 3 9,1% 84 5 79 124 13 1,5% 112 12 1 8 6 4 2 Order backlog of 359 MNOK by the end of Q3 2 217 Q3 EBITDA % Americas 218 Q3 Nordic
Software AKVA group Software ends the quarter with an EBITDA of 6 MNOK compared to 4 MNOK in Q3 217 45 4 35 Revenue and EBITDA % 38 4 19,9% 23,3% 1 1 4 3 3 2 Wise ehf ends the quarter with an EBITDA of 4 MNOK compared to 3 MNOK in the same quarter in 217 As noted in stock notice of 6.9.218 AKVA group has entered into an agreement to divest Wise lausnir ehf. The transaction is conditional on clearance from Icelandic Competition Authority 3 25 2 15 1 5 34 35 217 Q3 218 Q3 1-1 -2 EBITDA % EME Americas Nordic
Financials Detailed P&L (MNOK) 218 217 218 217 217 Q3 Q3 YTD YTD Total Order backlog 1 85 1 38 1 85 1 38 1 381 Order intake 448 546 1 558 1 913 2 471 P&L OPERATING REVENUES 637 484 1 854 1 531 2 88 Operating costs ex depreciations 567 423 1 672 1 351 1 848 EBITDA 71 61 182 18 24 Depreciation and amortization 26 2 74 61 83 EBIT 44 41 18 118 157 Net interest expense -4-3 -1-9 -11 Other financial items -2-3 -6-7 -1 Net financial items -5-6 -16-16 -22 EBT 39 35 92 12 136 Taxes 11 8 21 29 36 NET PROFIT 28 26 71 73 1 Net profit (loss) attributable to: Non-controlling interests -,3,2 -,4,3,1 Equity holders of AKVA group ASA 28 26 71 72 1 Revenue growth 31,7 % 36,8 % 21,1 % 32,6 % 3,2 % EBITDA margin 11,1 % 12,6 % 9,8 % 11,8 % 11,5 % EPS (NOK) 1, 1,1 2,68 2,81 3,86 Of which Land Based is 359 MNOK Includes 9 MNOK of acquisition costs related to the Egersund Net transaction Increased depreciation mainly due to increased rental CAPEX, investments in AKVA Marine Services and amortization. Amortization/depreciation related to the acquisition of Egersund Net is included with 2.3 MNOK Investment in subsidiaries accounted for by equity method YTD Q2 is reclassified from finance to operating revenues with -1.6 MNOK Minority shareholders (49%) in Wise Blue AS and (3%) in Grading Systems Ltd
Group financial profile remains strong Available cash Working capital Average working capital 165 256 18 197 26 42 462 418 37 4 35 3 25 2 15 1 5 8,7% 131 36 2,2% 8,4% 6,8% 6,7% 175 127 6,2% 5,8% 118 124 122 186 8,2% 382 15,8% 16 25 14 2 12 1 15 8 6 1 4 5 2 7,2% 17 5,3% 85 5,5% 5,7% 5,% 98 12 1 6,5% 6,3% 135 137 6,7% 152 9,% 217 9 8 7 6 5 4 3 2 1 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Including 151 MNOK of a 33 MNOK(+1 MNOK in quarter) credit facility in Danske Bank, as of Q3 218 Refinancing of long term loans, increased credit facility and established a revolving credit was finalized in October 217. The revolving facility was used in August 218 to finance acquisition of Egersund Net The graph shows absolute working capital and working capital relative to last twelve months revenue One month of revenue included in the % graph, while the balance sheet is included in total. With revenue of 12 months included it would be 13% Working capital in AKVA group of 227 MNOK and 155 MNOK in Egersund Net The graph shows 12 months average working capital and average working capital relative to last twelve months revenue With revenue of 12 months of Egersund Net it would be 7,2%
CAPEX (TNOK) CAPEX and CAPEX/Sales % CAPEX breakdown YTD 218 9 14,2% 15 Rental 8 7 11,2% Intangible 19 345 4 997 6 1 5 4 3 2 1 6,9% 5,5% 24 47 24 728 3Q 216 4Q 216 57 368 1Q 217 5,9% 31 666 2Q 217 4,% 19 495 3Q 217 78 936 4Q 217 4,3% 25 517 1Q 218 6,8% 42 852 2Q 218 2,6% 16 881 3Q 218 5 6 99 Ordinary CAPEX/Sales % CAPEX *Ordinary includes investment in new facilities in Helgeland Plast
Net interest bearing debt/ebitda of 2.6 Net interest bearing debt (MNOK) and net debt/ebitda Change in net interest bearing debt (TNOK) 7 6 5 4 3 2 1 1,4 213 1,5 212 2, 31 1,6 279 298 1,4 356 1,5 39 1,3 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 371 1,6 2Q18 632 2,6 3Q18 3,15 2,8 2,45 2,1 1,75 1,4 1,5,7,35 Net interest bearing debt 3.6.218 371 27 EBITDA -7 739 Income taxes paid 21 Net interest paid 3 684 Capex 16 881 Acquisitions / Divestments 225 364 Paid dividend 24 98 Sale of fixed assets -61 Currency effects 5 118 Other changes in working capital 55 555 Net change 26 991 Net interest bearing debt 3.9.218 632 261 NIBD/EBITDA (12 mth rolling) NIBD NIBD/EBITDA of 1,9 with inclusion of full year Egersund Net EBITDA
Group financial profile remains strong, continued Equity and Equity / Total Balance NIBD / Equity 1 1 1 9 8 7 6 5 4 37,1% 31,6% 31,3% 437 435 446 31,4% 29,4% 3,1% 28,% 26,8% 473 476 5 491 54 1 17 38,2% 5 4 3 2,49,49,7,63,58,71,63,74,62,8,7,6,5,4,3 3 2 1 1,2,1 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18,
Group financial profile remains strong, continued ROCE ROACE 14,6% 11,3% 4,4% 12,4% 9,8% 9,6% 11,1% 13,4% 15,4% 16,4% 14,3% 3,4% 7,9% 13,2% 11,4% 1,9% 12,7% 14,6% 16,5% 17,% 14,7% 1,2% 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Including only one month of EBIT from Egersund Net 11,3% based on full year EBIT inclusion of Egersund Net Including only one month of EBIT from Egersund Net 14,6% based on full year EBIT inclusion of Egersund Net
Cash flow statement CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW 218 217 218 217 217 (NOK 1 ) Q3 Q3 YTD YTD Total Net cash flow from operations 65 246 54 275 155 756 159 382 195 535 Net cash flow from change in w orking capital -55 555 1 55-69 513-8 277-18 13 Net cash flow from operational activities 9 692 55 825 86 243 79 15 87 44 Net cash flow from investment activities -178 786-21 585-228 523-74 688-117 392 Net cash flow from financial activities 169 618-2 998 187 223-46 325-22 346 Net change in cash and cash equivalents 524 13 241 44 943-41 98-52 334 Net foreign exchange differences -1 994-2 648-6 51-44 3 759 Cash and cash equivalents at the beginning of the period 156 872 112 638 116 969 165 543 165 543 Cash and cash equivalents at the end of the period 155 42 123 232 155 42 123 232 116 969
Balance sheet BALANCE SHEET 218 217 217 (MNOK) 3.9 3.9 31.12 ASSETS 2 663 1 521 1 663 Intangible non-current assets 1 88 578 596 Tangible non-current assets 325 197 246 Financial non-current assets 66 1 7 Inventory 427 223 238 Receivables 61 389 459 Cash and cash equivalents 155 123 117 LIABILITIES AND EQUITY 2 663 1 521 1 663 Equity 1 17 476 5 Minority interest 1 1 Long-term interest bearing debt 612 358 351 Short-term interest bearing debt 176 44 122 Non-interest bearing liabilities 858 642 689
Largest shareholders 2 largest shareholders No of shares % Account name Type Citizenship 2 73 15 62,1 % EGERSUND GROUP AS NOR 3 9 11,7 % WHEATSHEAF INVESTMENT GBR 1 72 857 3,2 % VERDIPAPIRFONDET ALF NOR 575 414 1,7 % VPF NORDEA KAPITAL NOR 54 642 1,6 % SIX SIS AG Nominee CHE 477 623 1,4 % VPF NORDEA AVKASTNING NOR 47 246 1,4 % EIKA NORGE NOR 47 232 1,2 % STATOIL PENSJON NOR 381 3 1,1 % MP PENSJON PK NOR 319 953 1, % NORDEA 1 SICAV LUX 3,9 % NORDEA NORDIC SMALL FIN 288 14,9 % VERDIPAPIRFONDET NOR NOR 274 85,8 % NORRON SICAV - SELEC LUX 211 3,6 % METZLER EURO SMALL + IRL 183 994,6 % VERDIPAPIRFONDET DNB NOR 15,4 % DAHLE BJØRN NOR 125,4 % UBS EUROPE SE Nominee LUX 17 871,3 % VERDIPAPIRFONDET EIK NOR 17 346,3 % STATOIL FORSIKRING AS NOR 1,3 % ASKVIG AS NOR 3 696 873 92,1 % 2 largest shareholders 2 637 43 7,9 % Other 33 334 33 1, % Total number of shares as per 3.9.218 Origin of shareholders, 5 largest countries No of shares % Origin No of shareholders 26 897 58 8,7 % Norway 131 3 946 562 11,8 % Great Britain 2 799 75 2,4 % Luxembourg 5 652 673 2, % Switzerland 7 366 114 1,1 % Finland 6 671 624 2, % Other 11 Total number of shareholders: 1 179 - from 28 different countries Share development Last 12 months Share price 76 74 72 7 68 66 64 62 Share price 1 8 6 4 2 okt.17 nov.17 des.17 jan.18 feb.18 mar.18 apr.18 mai.18 jun.18 jul.18 aug.18 sep.18 Last 5 years 214 215 216 217 218 Subscribe to Oslo Stock Exchange Releases from AKVA by email on: http://ir.akvagroup.com/investor-relations/subscribe Trading volume 5 4 3 2 1 Trading volume 18 15 12 9 6 3
Outlook by CEO Hallvard Muri
AKVA group in brief Leading technology and service partner Listed on Oslo stock exchange since 26 Deliveries in 65 countries over 4 years Companies in 12 countries. 1 491 employees
Solutions Cage Based Technology Land Based Technology Software
CAPEX Based Revenue OPEX Based Revenue
Order backlog and inflow, 215 through 218 Order backlog Order intake 43 697 547 93 283 1 77 479 647 454414 1 43 951 1 38 1 318 1 274 1 85 62 449 629 886 822 359 643417 494437 118 698 825 286 751726 376385 357 468 998 537 412 649 1 381 264 844 586 385 639 589 51 13 441 368 11 36 486 588 332 34 778 34 533 546 54 471 92 448 417 25 87 34 348 214 57 8 475 384 268 283 29 36 454 414 561 557 72 33 35 63 489 525 287 215 216 217 218 215 216 217 218 215 216 217 218 215 216 217 218 Q1 Q2 Q3 Q4 215 216 217 218 215 216 217 218 215 216 217 218 215 216 217 Q1 Q2 Q3 Q4 218 33% of total order backlog relates to Land Based Technology (LBT) Order intake of 448 MNOK in Q3 218 Land Based Other 4 MNOK of the total order backlog relates to Egersund Net and subsidiaries Order intake of 95 MNOK in Egersund Net in the quarter
Outlook AKVA group Egersund Net integration process developing well Continued positive outlook for most markets, good opportunities to grow on the Canadian east coast Land Based focus on post smolt, still high quote bank Execution of improvement programs, manufacturing, sourcing and logistics Increasing focus and growth outside Nordic Markets Expanding services and OPEX based business Product improvements and optimization