Eqva ASA

Earnings Release • Aug 21, 2017

HAVYARD GROUP ASA IR summary Q2 2017 - 21.08.17

Headlines/Milestones Q2 2017

• High order intake with large system deliveries from own companies. Order book has increased with NOK 1,978 million in the quarter.
• EBIT of NOK -14.4 million and EBIT-margin of -5.7 % % in second quarter of 2017.
• EBIT of NOK -10.2 million and EBIT-margin of -1.7 % in first half of 2017.
• 2017 will be, as previously announced, a year of low activity on the shipyard and new contracts signed recently and in the future will to a small extent be completed in 2017. The Group's operating profit first half of 2017 is equal to expectations and the target for 2017 is a positive operating result for the Group.
• New contracts in first Quarter
• Contract for building of pelagic trawler to France Pélagique including complete Odin`s Eye® Ultra-fast DC grid system from Norwegian Electric Systems AS (expected delivery December 2018).
• Contract for delivery of the worlds largest live fish carrier to Sølvtrans with design from Havyard Design & Solutions AS and large fish handling equipment from Havyard MMC AS (expected delivery June 2019)
• Contract for construction of 5 ferries to Fjord1, with design from Havyard Design & Solutions AS and hybrid propulsion systems from Norwegian Electric Systems AS (delivery from Q4 2018 to Q3 2019)

Outlook

• Havyard's strategy is to continue to develop the company as a maritime technology group with unique expertise and products throughout the value chain. Our focus areas are Energy, Fish and Transport, where we have established a strong market position in segments with good activity. In particular, the contracts for design, construction and equipment to five ferries to Fjord 1, show that we are successful in our efforts and the prospects for new contracts are good.
• After restructuring, the organization is more scalable and market-oriented, where we can quickly focus on areas where we are experiencing increasing needs. All business areas balance their activity between internal and external deliveries, where the goal is healthy growth with competitiveness and profitability at all levels.
• Of the group's companies there will be good activity in HPR and MMC FP in 2017, and increasing activity in HDS and NES. For HST, however, it will be low activity in 2017. The order backlog is increasing with profitable activity for the coming years and has good expectations for 2018 and especially 2019.

Outlook - segments

Group Key Figures

	2017 YTD	2016 YTD	2017 Q2	2016 Q2	2016
Operating revenue	618	1008	254	548	2003
EBITDA	$\overline{4}$	63	$-7$	38	132
EBIT	$-10$	48	$-14$	29	104
EBIT-margin	$-1.65%$	4.78%	$-5.68%$	5.38%	5.17 %
Profit before tax	$-10$	46	$-14$	25	$-30$
Earnings per share	$-0.15$	1.56	$-0.35$	0.9	$-1.58$
NIBD	13	90	13	90	15
Working Capital	148	155	148	155	174

Order backlog

• External order backlog of approx. MNOK 1.058 (Q4 1.170)

• MNOK 536 in 2017
• MNOK 1700 in 2018
• MNOK 800 in 2019

Figures per segment

(NOK million)	Ship	Design &	Power &	MMC	Havyard	Other	Havyard
	Technology	Solutions	Systems		Production		Group
Operating revenues, External	239.6	104.6	27.5	181.0	29.0	36.0	617.7
Operating revenues, Internal	1.5	8.3	27.5	22.6	49.3	$-109.3$	0
Total operating revenue	241.1	112.9	55.0	203.6	78.3	$-73,3$	617.7
Operating profit /loss EBITDA	$-5.6$	9.9	$-1.7$	11.9	$-9.3$	$-1.0$	4.1
Depreciation	6.2	1.8	2.2	3.4	0.4	0.2	14.3
Operating profit/(loss) (EBIT)	$-11.9$	8.1	$-3.9$	8.5	$-9.7$	$-1,2$	$-10.2$
Net financial items	$-1.1$	1.6	0.5	$-2.3$	1.0	$-4.5$	$-4.7$
Share of profit/(loss) from as- sociate						4.9	4.9
Profit/(Loss) before tax	$-12.9$	9.7	$-3.5$	6.2	$-8.7$	$-0.7$	$-10.0$
Income tax expense	$-3.1$	2.1	$-0.8$	1.4	$-2.1$	$-1.4$	$-4.0$
Profit/(Loss)	$-9.8$	7.6	$-2.7$	4.9	$-6.6$	0.6	$-6.0$

Balance sheet

	2017 Q2	2016 Q2	2016
	(unaudited / urevidert)
Non current assets
Goodwill	103 045	100 527	103 04
Licenses, patents and R&D	93 667	81 693	89 236
Property, plant and equipment	237 946	240 935	234 615
Investment in associates	30 030	71 501	25 084
Loan to associates	23 980	20 305	22 090
Investment in financial assets	15 511	66 245	19 19
Other non current receivable	24 161	63 572	25 613
Total non current assets	528 341	644779	518 873
Current Assets
Inventory	122 039	54 236	114 903
Accounts receivables	134 836	108 815	157 296
Other receivables	61 0 31	76 159	53 919
Construction WIP	92889	466 533	224 029
Cash and cash equivalents	296 594	236 443	266 057
Total Current Assets	707 389	942185	816 204
TOTAL ASSETS	1235730	1586964	1335 077

	2017 Q2	2016 Q2	2016
	(unaudited / urevidert)
Equity
Share capital	1239	1126	1239
Share premium reserve	22 535	5 4 6 3	22 535
Treasury shares	$-5$	-5	$-5$
Retained earnings	404 197	479 999	407 921
Non-controlling interest	52 118	57 056	54 502
Total equity	480 083	543 639	486 192
Long term liabilities
Deferred tax liability	32 556	44 520	36 645
Bond loan	91 207	137 848	103728
Loans and borrowings, non-currer	69885	70104	63 246
Other long-term liabilities	2418	3 2 2 0	3 4 3 4
Total long term liabilities	196 066	255 693	207 052
Current liabilities
Accounts payables	97 579	262 516	121 487
Taxes payable	3 812	1 2 9 1	5 9 19
Public duties payables	25 596	28 4 4 4	49759
Construction loans	$\Omega$	207 395	149 163
Bond loan (instalments next period	5 0 0 0	8 2 1 3	24 640
Loans and borrowings, current	12 4 0 6	7140	6993
Prepayments in excess of construc	272 670	115 076	116 467
Other current liabilities	142 516	157 558	167 406
Total current liabilities	559 581	787 633	641833
Total liabilities	755 647	1043326	848 886

Net interest bearing debt: MNOK 13

• Working capital: MNOK 148
• Equity ratio: 38,9 %

Cash Flow

Positive CF from operations in Q2:

• Changes in construction WIP
• Prepayments from customers

Negative CF from Investments Q2:

New minor investments

Negative CF from financing Q2:

• Instalments on debt 31 MNOK instalment paid on Bond loan
• Interest costs

JOK 1,000)	2017 YTD	2016 YTD	2016
	(unaudited /urevidert)
ASH FLOW FROM OPERATIONS
rofit/(loss) before tax	$-9.961$	45 828	$-30103$
wes paid	$-2106$	$-1442$	$-3173$
epreciation	14.325	14.747	28.425
at interests	6.045	5.962	8.299
rofit/loss disposals property, plant and equipmer	٠	٠	484
hange in bond loan (amortization)	896	$-226$	667
npairment			77 356
hare of (profit)/loss from associates	$-4.946$	4 190	50 614
hanges in inventory	$-7136$	$-4161$	$-2124$
et changes in construction loans	$-149163$	120 109	61876
hanges in accounts receivables/construction WIP	153 600	$-257252$	$-125934$
hanges in accounts payable	$-23908$	105 907	$-35122$
hanges in prepayments from customers	156 203	14 29 2	15 684
hanges in other current receivables/liabilities	$-50926$	$-3904$	46 607
et cash flow from/(to) operating activities	82923	44 049	93 556

Investments in property, plant and equipment	$-12.347$	$-2029$	$-5,534$
Disposal of property, plant and equipment	$\sim$	$\overline{\phantom{a}}$	2900
Investment in intanaible assets	$-9741$	$-4.364$	$-19143$
Investment in/disposal of financial assets	3.617	$-3220$	$-3522$
Purchase of subsidiaries	۰	۰
Interest income	2.395	2.566	7750
Changes in long term receivables	$-438$	$-6.056$	119
Net cash flow used in investing activities	$-16514$	$-13102$	$-17.431$

New long term debt	11 023
Repayment long term debt	$-36813$	$-7743$	$-14.388$
Cost renegotiation bond loan	$-1643$	$-2610$	$-2610$
Cost convertion of bond loan			$-1.401$
Interest costs	$-RAAD$	$-8529$	$-16049$
Dividends		$-251$	$-251$
Net cash flow from/ (used in) financing activities	$-35873$	$-19133$	$-34999$
Net change in cash and cash equivalents	30 536	11 814	41,427
Cash and cash equivalents at start of the period	266 057	224 629	224 629
Cash and cash equivalents at end of the period - a	296.594	236,443	266.057
Restricted bank deposits at the end of the period	128 676	99774	79 135
Available cash and cash equivalents at the end of period	167 918	136 669	186 922

HSE / QA

An extensive plan is implemented to reduce injuries and absence including subcontractors

Average sick leave

Last 18 months sick leave on 3.96 % So far in 2017 sick leave on 4.27 %

HSE / QA

• Strong focus on Quality in the Group
• Quality deviations are measured, documented in action lists and handled effectively
• Internal audits in accordance with ISO 9001 and ISO 14001
• Supplier audits
• Audits from customers