Company presentation - AKVA Group relations/Financial info/other... · Strong demand for salmon - high and stable salmon prices expected going forward Annual harvest volumes of Atlantic

Your Aquaculture Technology and Service Partner

Company presentationNovember 2015


Important Information About this Company Presentation

This Company Presentation has been prepared by AKVA group ASA ("AKVA group" or the "Company") for information purposes only, and does not constitute investment advice

or an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction to any person. Any recipient or reader of this Company Presentation contemplating to make

an investment in the Company must rely on their own examination of the Issuer, including the merits and risks involved.

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or accessing this Company Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and

that you will conduct your own analysis and are solely responsible for forming your own opinion of the potential future performance of the Company’s business.

The information contained in this Company Presentation has not been independently verified. No representation or warranty (express or implied) is made as to the accuracy or

completeness of any information contained herein, or any oral information provided in connection therewith, and it should not be relied upon as such. The Company accepts no

liability whatsoever arising directly or indirectly from the use of this Company Presentation.

This Company Presentation is current as of 14 November 2015. Nothing herein shall create any implication that there has been no change in the affairs of AKVA group since such

date. This Company Presentation contains forward-looking statements relating to the Company's business, the Company's prospects and other forward-looking statements.

Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", "expects",

"predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this

Company Presentation, including assumptions, opinions and views of the Company or cited from third party sources, are solely opinions and forecasts which are subject to risks,

uncertainties and other factors that may cause actual events to differ materially from any anticipated development.


AKVA group highlights

• Undisputed #1 supplier of technology and services to the aquaculture sector

• Salmon farming is driven by high demand, high prices and increased technological sophistication

• New salmon farming growth to come from land-based and more exposed locations with higher technological requirements

• AKVA group is well positioned for continued growth and margin improvement – active dividend policy


Agenda

Company

Market

Financials

1

2

3


AKVA group – uniquely positioned for future growth

Cage-based Land-based

• Plastic and

steel cages

Infra-structure

Feed systems, sensors

and cameras

Technology and farming services

• Land-based facilities

Land-based equipment

1 2

4

Software3

CA

PEX

bas

ed

rev

en

ue

OP

EX b

ase

d r

eve

nu

e

Leading technology solutions and service partner to the global aquaculture industry

Global presence -subsidiaries in 8 countries

690 employees

Market cap of NOK ~1050m and net debt of NOK 98m


Cage-based technology

Overview of AKVA group deliveries Comments

• Complete range of technologies to operate any cage based aquaculture system in sea and lakes

• Most technologies are in-house developed – AKVA has partnerships on nets, mooring and larger boats

• Solution can be configured according to variation in customer needs

• Trend towards enlargement and complete system deliveries

• Complete site investment in developed salmon industry costs NOK 25-40m per site and is growing

• Delivery time for a complete site is 6-8 months

• Significant installed technology base – foundation for ongoing buildup of technology services

1


Land-based technology

Overview of AKVA group deliveries Comments

• Complete range of technologies to operate land based aquaculture systems. Most technologies are in-house developed. AKVA also holds installation capability

• Solutions can be configured according to variation in customer needs

• Trend towards enlargement and complete system deliveries

• Complete site investment in developed salmon industry range from NOK 200 – 400m for a complete facility. Farming technology constitutes 30-50% of total investment

• Delivery time for a complete site is 6- 18 months

• Acquisition of Aquatec Solutions in September 2015 strengthen our market position further

• Growing installed technology base – foundation for ongoing buildup of technology services

2


Software

Illustration of software offering Comments

• Clear #1 supplier of best of breed software for management, monitoring and control of fish farming operations (Fishtalk) as well as operational software running and automating farming operations (AKVA control and AKVAconnect).

• Clear #1 player in the salmon industry, however systems are applicable for multiple species

• Reoccurring business model – licensing right to use – prepaid. Pricing linked to volume of production and inflation

• Developing and launching new modules with similar revenue potentials and business model as existing modules in place.

3


Technology and farming services

Illustration of technology and farming services Comments

• Building reoccurring technology services based on large installed technology base

• Utilizing size of AKVA and the most developed infrastructure established in all salmon producing regions.

• Service agreements secure entry to customers, revenues for reoccurring maintenance and upgrades as well as customer satisfaction

• Introduction of equipment rental bundled with services represents the next step in development, utilizing existing service infrastructure and shifting revenue streams from customer CAPEX to customer OPEX

4


Presence in all main farming regions

Map of activities Revenue per region, YTD Q3 2015

Nordic

Americas

Export

Nordic67 %

Americas19 %

Export14 %


Strategic priority to increase the proportion of software and service-related revenue

Revenue reoccurring vs technology, YTD Q3 2015 Comments

• Introduction of rental business model in Norway. Already successfully introduced in UK and Canada

• Rental is an “all inclusive service” providing for instance light or picture for an agreed period of time (2 to 5 years duration) - reduced CAPEX and reducing operational work from the customer

• Acquisition of YesMaritime in 2014, a provider of diving, ROV and other services to the salmon farming sector (Farming services)

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

• Aim of delivering more than 30% of revenue through software and services – by developing software, farming services, technology services and rental further

CAPEX based

revenue;73 %

OPEX based revenue;

27%



AKVA group’s values


Customer 1

Customer 2

Customer 3

Other

AKVA group serves all salmon farmers in the World

Customer examples Revenue per customer, YTD Q3 2015

http://www.australis-seafoods.com/

http://www.australis-seafoods.com/


40 years of history – significant operational improvements undertaken in recent years

2007/2008

UNIAqua / Idema Aqua

Focus on:- Customer satisfaction- Profitable growth- Controlled cost- Sound financial position

Founder-driven growth

1974

Plastic cages

1980s

Feed system

1980s

Steel cages

1990s

International expansion

2000s

Acquisitions

2006

Listed on OSE

2007

Acquisition of MaritechInternational

Profitable growth

2011

Share issue

2012

Sale of the Maritechoperation in Norway

2014

Acquisition of YesMaritimeAS

2013

Acquisition of Plastsveis AS

2014

Introduction of new dividend policy

2015

Acquisition of Aquatec Solutions A/S


Agenda

Company

Market

Financials

1

2

3


Strong demand for salmon - high and stable salmon prices expected going forward

Annual harvest volumes of Atlantic salmon Salmon price history and forecast, NOK/kg

2.5

1.0

0.0

2.0

0.5

1.5

2005 2010

+9%

20001995

Million tonnes

2015e

4245

413938

26

2016e1) 2017e1)2015e1)20142013Avg 1996-2012

Source: Fish Pool, broker research reports, Arctic SecuritiesNotes: 1) Actual prices and Fish Pool forwards


Aquaculture is becoming increasingly technology-intensive

Source: Salmon farmer annual reportsNotes: 1) Based on reported farming capex and harvest volumes for Marine Harvest, Salmar, Cermaq, Lerøy, Grieg, NRS and Bakkafrost, 2015 figures are based on company guidance

Farming capex, NOK/kg harvested 1) Comparison of cage in 1980 to cage in 2014

4,0

1,6

2006 2015e

+2.5x


Increased regulation adds complexity to salmon farming

Challenge Regulation AKVA group solution

Sea lice

• Strict regulatory regime in place to combat sea lice in Norway as well as in other regions. This drives complexity and demand for technology tools

• Several initiatives in a comprehensive approach to solve the sea lice issue, including involvement in «lice tube» solution, development of exposed farm concepts as well as use of technologies to distract lice from fish farms

Escapes

• «Zero escape» vision for the salmon industry with rigid regulatory framework support as well as substantial fines

• Development of more robust less risk exposed technological cage solutions as well as specialized netting solutions, such as ECOnet. ECOnet is based on PET materials developed as fencing technology in other industries, now being introduced to fish farming by AKVA group

Disease

• Control and reduction of disease is key in all aquaculture operations, supported by increased rigidity and regulatory framework globally

• Development range of technical solutions, including land based technologies, reducing risk of disease as well as spreading of disease. Technologies enabling movement of industry from high density areas close to shore line towards more exposed sites key in strategy. Implying larger more robust solutions


Driving forces – salmon industry

SHORELINE

The exponential challenge of the coastal zone

• CONCENTRATION OF STAKEHOLDER INTEREST

• WATER QUALITY

• AVAILABLE SPACE FOR EXPANSION

• ENVIRONMENTAL IMPACTS OF CONCENTRATED ACTIVITIES



SHORELINE

The exponential challenge of the coastal zone

MAIN FOCUS AREA FOR TECHNOLOGY INNOVATION

MAJORITY OF RESOURCE ALLOCATION



SHORELINE

AVAILABLE TECHNOLOGY MAKES DIVERSIFICATION FROM COSTAL SONE POSSIBLE

EXPOSED SITES FARMING

LAND BASEDFARMING


Growth on land and in exposed areas will increase technology requirements

Land-based

• Larger smolt increasesproduction and reducesbiological risk

• Potential for full land-based grow-out

Sheltered

• High utilization of licenses in existingfarming regions

• New regions includeRussia, Iceland and Australia

Exposed / offshore

• Ongoing trend towards more exposed areas• Offshore emerging as new segment


The growing global movement to participate in sustainable aquaculture

The progressive regions:

Salmon

Sea Bass & Sea Bream

Other Species – emerging regions

Middle East:Offshore – Saudi , Oman, Iran (Caspian)Lakes/Dams – IranLand Based – UAE, Saudi, Oman, Iran

Sub-Sahara Africa:Offshore – Mauritius, MozambiqueLakes/Dams – Lesotho, Ghana, SE AfricaLand Based – SE Africa

Asia:Offshore – Indonesia, Malaysia, Japan, South Korea, India, Sri LankaLakes/Dams – China, VietnamLand Based – China, Thailand, Malaysia, Indonesia, Vietnam


Cycle development

Time

Continued growth expected – still in early stage of development

Cycle development

Oil

Aqua

Growth drivers

• The salmon industry is still the frontier. Analysts expects limited volume growth in salmon farming in 2014-2020. This implies high salmon prices which is the prime driver for growth in the technology and service industry

• Additional growth from increased regulation, adding complexity and adding need for compliance

• Additional growth from other species and regions

• Additional growth from maturation of the industry – the players are getting more specialized


AKVA group is the undisputed #1 technology and service provider to the aquaculture sector

CagesAquaculture machinery

Water engineering

Software & ITService & Support • AKVA group is the

undisputed #1 supplier to the aquaculture industry

• Complete offering increasingly seen as positive by customers

• Scale provides technological advantage

• Holds the most well-known brands in the industry

• Present in all main markets

Revenue, NOKm


Agenda

Company

Market

Financials

1

2

3


AKVA group has seen operational revenue growth of 55% from 2012 to 2014

Notes: 1) 2012 FY for software is excluding a one of gain of MNOK 29 related to the sale of the Norwegian Maritech business

AKVA group revenue Comments

803 9897

724 851

941

+55% +15%

2014 FY 2014 Q3 YTD

657

94

2013 FY

749

94

52

115

2012 FY 1)

919

973

1 081

1 246

• Growth in cage-based driven by increased activity in the Nordic- , Canadian-, and UK market.

• Growth in land based due to the acquisition of Plastsveis AS in April 2013 and increased activity in our recirculation business

Cage-basedLand-basedSoftware

167

106

2015 Q3YTD

13677


Target of 10% near-term EBITDA margin –further potential longer term

Notes: 1) 2012 FY for software is excluding a one of gain of MNOK 29 related to the sale of the Norwegian Maritech business

AKVA group EBITDA-margin across segments Comments

• Near-term target of 10% EBITDA margin

• Land-based margins should increase due to restructuring of business including new management and new operational set-up

• AKVA group margins set to increase with increasing mix of Software and Services

9%

-11%

-3%

Cage-based

10%

4%3%

Group

8%

5%4%

Software

14%

20%

15%

Land-based

0%

2014 FY2013 FY2012 FY 1)

10%

2015 Q3 YTD

4%

19%


Operational leverage is a driver for increased margins

Notes: 1) 2012 FY is excluding a one of gain of MNOK 29 related to the sale of the Norwegian Maritech business

AKVA group gross margin and SG&A 1) Comments

• Fixed cost base has been maintained on a stable level since 2012, while revenue has increased significantly

• The number of FTE’s decreased in 2013 due to cost focus and controlled reduction of exposure in Chile

• The number of FTE’s has increased in 2014 due to the acquisition of YesMaritime and due to increased activity in the Nordic and Chilean market

Figures in '000 NOK 2012 2013 2014 2014 Q3 YTD 2015 Q3 YTD

Revenue 802 530 918 670 1 246 059 941 012 1 081 261

COGS 587 833 674 770 928 395 695 752 792 694

Gross margin 214 697 243 900 317 664 245 260 288 567

GM in % 26,8 % 26,5 % 25,5 % 26,1 % 26,7 %

OPEX 185 881 196 995 214 299 155 274 180 538

EBITDA 28 816 46 905 103 365 89 986 108 029

EBITDA in % 3,6 % 5,1 % 8,3 % 9,6 % 10,0 %

# FTE 650 566 726 707 690

OPEX/Revenue 23,16 % 21,44 % 17,20 % 16,50 % 16,70 %


Order backlog is all-time high

AKVA group order backlog Comments

• The order backlog end of Q3 2015 includes MNOK 187 from Aquatec Solutions A/S which was acquired on September 30th, 2015. Aquatec Solutions A/S delivers land based technology

• Delivery time of backlog is 1 to 18 months with most of the delivery in the first six months

• Seasonal pattern of increasing backlog in Q4 and Q1 and decreasing backlog in Q2 and Q3

200

100

0

600

300

400

500

4Q3Q2Q

NOKm

1Q

201520132012 2014

700


Healthy balance sheet – bank debt was refinanced in 2014

AKVA group balance sheet Comments

• Bank debt refinanced in January 2014 with improved terms and conditions

• All bank debt is now long term

• NOK 140m is a 5 years bullet

• NOK 52m is a 5 year serial loan

• AKVA group also has a credit facility of NOK 90m

BALANCE SHEET 2015 2014

(MNOK) 30.09 31.12

ASSETS 1 160 904

Intangible non-current assets 337 278

Tangible non-current assets 88 74

Financial non-current assets 8 2

Inventory 209 167

Receivables 382 329

Cash and cash equivalents 136 54

LIABILITIES AND EQUITY 1 160 904

Equity 439 388

Minority interest 3 2

Long-term interest bearing debt 188 129

Short-term interest bearing debt 46 14

Non-interest bearing liabilities 483 372


Launch of new dividend policy in AKVA group ASA in 2014

32

• The Company’s main objective is to maximize the return on the investment made by its shareholders through both increased share prices and dividend payments

• A dynamic dividend policy was launched in 2014. Based on the financial performance and outlook the company aims to pay out dividend according to the two step policy. The policy enables dividend distribution twice every year if the two step criteria's are fulfilled

• Pay out according to new dividend policy has so far been:

• NOK 1.00 per share / total NOK 25.8 million in Q4 2014

• NOK 1.00 per share / total NOK 25.8 million in Q4 2015

• A two step policy:

• The dividend level shall reflect the present and expected future cash generating potential of AKVA group. AKVA group will target a net interest-bearing debt/equity ratio of less than 0.5x

• When the target debt vs. equity level is met, at least 60% of the annual free cash flow after operational and financial commitments is intended to be distributed as dividend

Applicable statutory restrictions shall be observed


AKVA group highlights

• Undisputed #1 supplier of technology and services to the aquaculture sector

• Salmon farming is driven by high demand, high prices and increased technological sophistication

• New salmon farming growth to come from land-based and more exposed locations with higher technological requirements

• AKVA group is well positioned for continued growth and margin improvement – active dividend policy

Documents

Company presentation - AKVA Group relations/Financial info/other... · Strong demand for salmon - high and stable salmon prices expected going forward Annual harvest volumes of Atlantic