ABL Group — Investor Presentation 2016

Oct 27, 2016

THIRD QUARTER RESULTS 2016 October 27, 2016

aqualis.no

Disclaimer

• This Presentation has been produced by Aqualis ASA (the "Company" or "Aqualis ") solely for use at the presentation to investors and other stake holders and may not be reproduced or redistributed, in whole or in part, to any other person. This presentation is strictly confidential, has not been reviewed or registered with any public authority or stock exchange, and may not be reproduced or redistributed, in whole or in part, to any other person. To the best of the knowledge of the Company, the information contained in this Presentation is in all material respect in accordance with the facts as of the date hereof, and contains no material omissions likely to affect its importance. However, no representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, neither the Company nor any of its subsidiary companies or any such person's officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this Presentation. This Presentation contains information obtained from third parties. Such information has been accurately reproduced and, as far as the Company is aware and able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information to be inaccurate or misleading.
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• SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALISE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED IN THIS PRESENTATION. THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT THE INFORMATION INCLUDED IN THIS PRESENTATION.
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Agenda

1. Highlights David Wells CEO

1. Financial review Kim Boman CFO

2. Outlook David Wells CEO

Q3 2016 Highlights

• Total operating revenue of USD 6.4 million, down 33% from Q3 2015
• Strong reduction in activity level in the Far East due to reduced capex contracts
• Operating loss (EBIT) of USD 0.7 million with cost efficiency measures continued to take effect throughout the quarter
• The activity level in Q3 is low due to adverse weather conditions offshore India, vacation months and weak market conditions in the oil and gas market
• OWC maintained high activity in the offshore wind market and secured new contracts
• Billing ratio for technical staff of 73% in Q3 2016, down from 75% in Q2 2016
• Order backlog at USD 8.5 million
• ADLER Solar¹ results impacted by lack of larger projects and introduction of new services
• Cash balance of USD 11.1 million at the end of Q3 2016
• 161 employees² at end of Q3 2016, down from 175 at end of Q2 2016
• Continued solid HSE performance and ISO 18001 compliant

⁽¹⁾ ADLER Solar is accounted for as an associate company

⁽²⁾ Full time equivalent employees. Numbers include subcontractors on 100% utilization equivalent basis. Figures excluding Adler Solar

Energy consultancy with strong market niche positions

• Global presence with established market position
• Marine consultancy and engineering services
• Clients: Asset owners, oil companies, EPC contractors, financial institutions, insurance companies

Offshore Oil and Gas Offshore renewables Solar¹

• Main activity in Europe
• Geotechnical & engineering, project management and due diligence for technology, projects and markets

• Clients: Developers, utilities, vessel owners, financial institutions, insurance companies, investors

• Strong position in Germany. Growing in Japan

• Technical services for the entire life cycle of PV plants
• Clients: PV manufacturers, plant operators, EPC contractors, financial institutions, insurance companies, investors

Enhanced service offering through the groups global network, client base, resources and expertise

1) Aqualis has an ownership of 49.9% in ADLER Solar

Offshore Oil & Gas

- Service offering covering the life cycle of offshore assets

Marine project / asset life cycle

	Engineering / Project initiation design phase	Project Construction procurement	Hook-up and commissioning	Asset management	De commissioning
e or h s Offs e c vi s er ali s u q A	Engineering (niche-focus): Basic / conceptual design / FEED Modifications and upgrades of drilling rigs / FPSOs / FSOs / lift boats Transportation & installation analysis	Construction yard supervision: Site attendance on behalf of owners, shipyards, financial institutions, 3rd parties Conversions & upgrades + New-builds Due diligence / compliancy; financial community focus	Marine operations: Transport and installation services; "moving of offshore assets" Rig moving Float-overs Site attendance & procedure management	Marine warranty services Mooring analyses audits DP inspections and audits Jack-up site assessments	Inspection & approvals: Condition and suitability surveys /

Aqualis' key competencies cover both offshore opex and capex cycles

Offshore renewables

- Broad service offering with a high reputation

Offshore Wind Project Lifecycle

Solar

- Broad service offering with strong reputation

Our service portfolio in accordance with the "lifecycle" of a PV system
Before grid connection: < 2 years			After grid connection: < 25 years
Planning	Delivery	Construction	Operation	End of life
Engineering Services Surveys, expert reports, analysis, consulting Planning support and Project development Technical documentation Consulting Advice on the selection and procurement of modules and components	PV test center (onsite or offsite) Incoming goods inspection Logistics Logistics Management Transportation Warehousing	Engineering Services Technical consultation Construction supervising and monitoring Expert reports Measurements for the commissioning Documentation	Engineering Services Expert reports Technical Due Diligence Performance and data analysis Failure and damage analysis, measurements, tests Warranty/guarantee check Plant optimization PV test center (onsite or offsite) Visual inspection, testing, measurements, repair Service Teams Maintenance, inspection, fault clearance Repair and Replacement Dialog Center Customer support Warranty management	Engineering Services Repowering Service Teams Replacement / exchange of components Dismantling Packing Logistics Transportation Warehousing Spare part management Recycling Sales support Marketing of modules and components on the secondary market
			Procurement Spare parts / components

Q3 2016 – main new contract wins

Gina Krog Transportations

Gina Krog will be developed via a new, standalone, 20 well, 70 bed jacket platform, which has a designed production capacity of 60,000 bbls/d of oil and 9,000,000 m3/d of gas. Gina Krog is a Statoil led consortium with 1st production scheduled in 2017

TPI Megaline's heavy transport vessels "Mega Caravan" and "Mega Caravan 2" were used for the two voyages from the fabrication shipyard in South Korea to the Gina Krog field at the Norwegian continental shelf.

The first vessel carried the 12,000 MT Integrated deck

• The second vessel carried
• 5,000 Te process module
• 4,000 Te unity module
• 300 Te flare bloom

The vessels sailed in July 2016.

Gina Krog Transportations

Working for the carrier, TPI Megaline

• Sea fastening and grillage design
• FEM analysis of the grillage/sea fastening and vessel structure
• Deflection analysis, buckling check
• AFC AutoCAD drawings including validation report
• Provision for vessel local strength check and vessel modification for load out and transportation (frame/BHD reinforcement) if needed
• Both loadout (by skidding and self-propelled modular transporter) and transportation load cases are considered in the FEA

Rig Moving Operations – Noble Lloyd Noble

Arrival in Scotland in September, mobilising to Mariner Field this month

Aqualis SoW is:

• MWS services (rig move and dry transportation)
• Site Specific Engineering Assessments
• Rig move consultancy

World's largest jack up Gusto MSC CJ70 design 150 m water depth capability (214 m leg length)

Long term contract with Statoil at Mariner Field Will be operating in 110 m wd and 69 m air gap

Upper Zakum 750 Islands Surface Facilities project

The UZ750 project is one of the major offshore field development projects in the UAE. It is located 80km off the coast of Abu Dhabi, and involves the construction of four production artificial islands.

The second phase involves the development of the facilities on the islands.

Up to 22 production modules comprising a wellhead control and oil processing unit are being constructed. The facilities are expected to come on stream in 2017.

Upper Zakum 750 Islands Surface Facilities project

The Project involves 13 shipments to Abu Dhabi from

• Bomesc, Tianjin
• DSME, Korea
• Dynamac, Singapore

2 shipments so far. First was 2 barges loaded with modules onto on the HLV "Black Marlin" from Bomesc shipyard, Tianjin (China). Second was loaded from Singapore.

Aqualis undertaking:

• Loadout quayside mooring and ballast plan
• Barge motion analysis and transport stability
• Barge local strength checks
• Slamming and submergence checks on barge overhang from HLV
• Provision of Client's Marine Representative during loadout and float-on operations

Currently working on next 3 shipments from China, Korea and Singapore. 8 more shipments to follow.

Offshore Oil & Gas

• Extensive client list

Offshore renewables

- Strong track record and expanding client list

East Anglia ONE (UK)
Bay (UK) Kentish Flats Ext (UK)
Galloper (UK)
Beatrice (UK) (UK) Gaoithe (UK) London Array (UK) 1 & 2 (UK)
Sands (UK) (UK)
(UK)
(UK) Triton Knoll (UK) (DE)
(DE)
(UK) Horns Rev 3 (DK) (FR)

| • East Anglia ONE (UK) • Navitus Bay (UK) • Kentish Flats Ext (UK) • West of Duddon Sands (UK) • Galloper (UK) • Beatrice (UK) • Hornsea (UK) • Neart na Gaoithe (UK) • London Array (UK) • Walney 1 & 2 (UK) • Barrow (UK) • Lincs (UK) • Gunfleet Sands (UK) • Ormonde (UK) • Robin Rigg (UK) • Westermost Rough (UK) • Gwynt y Mor (UK) • Triton Knoll (UK) • Wikinger (DE) • Borkum West II Phase 1 & 2(DE) • Nordsee Ost (DE) • Hornsea (UK) • Horns Rev 3 (DK) • Fecamp (FR)

Track record

Geotechnical assessment & support:	6.1 GW
Project management & support (incl. construction):	5.4 GW
Subsea cables consultancy (route, risk, remediation):	4.0 GW
Offshore Substations advisory:	2.2 GW
TDD & Peer Review of offshore wind projects:	2.3 GW
Total Experience	20.0 GW

Solar

Selected clients

• E.on
• First Solar
• IBC Solar AG
• Juwi Energieprojekte
• KOSTAL Industrie Elektrik
• LG Chem
• Masdar
• REC Solar
• R+V Allgemeine Versicherungen
• RWE
• SolarWorld
• Sonnedix
• Soventix
• Stadtwerke Münster
• SV Sparkassenversicherung
• Viessmann
• VR Leasing
• Westfälische Provinzial Versicherung

Track record

Incoming goods inspection:	100 MW
System tests &measurements (IR, IV, EL, VIS, ISO):	650 MW
PV system repair and overhaul :	> 1,000 projects
Expert reports (insurance damage)	> 1,800 projects
Performance reports and technical Due Diligence	300 MW
Total Experience	2.7 GW > 3,000 projects

Client List Note: ADLER Solar also work on assignments considered confidential, so above list is not exhaustive.

Order backlog development

Order backlog (USDm) Highlights Q3 2016

• Pipeline of work expected from call out contracts is positive, but visibility is limited and timing is hard to predict
• Backlog upside affected by re-focused strategy of supporting clients on day-to-day service operations which are typically call-out contracts that do not get included in backlog figures
• Market push to win new work and clients meeting with some good successes
• Backlog levels decreased in Q3 2016

Staff level development

Staff level development¹ Highlights Q3 2016

(1) Full time equivalent. Numbers include subcontractors on 100% utilization equivalent basis

(2) Tristein AS included from May 2014; OWC Ltd from July 2014

(3) Figures excluding ADLER Solar and staff made temporary redundant

• The decrease in staff levels is related to a reduction in specialist technical staff, administrative staff and use of subcontractors

Improving billing ratio trend after weak start of 2016 - Total technical staff (including subcontractors), billing ratio %

Notes:

(1) Billing ratio for Technical Staff including subcontractors. Excludes management, business development, admin support staff and temporary redundancies. Figure calculated as billable hours / net hours available. Net hours available excludes paid absence (public holidays, time off in-lieu, compassionate leave, authorized annual leave) and unpaid absence (sabbatical and other unpaid leave). Figures excluding ADLER Solar

Improving billing ratio trend after weak start of 2016 - All staff, billing ratio %

Notes:

(1) Billing ratio for all staff, including Technical Staff, subcontractors and admin/group staff. Figure calculated as billable hours / net hours available. Net hours available for technical staff excludes paid absence (public holidays, time off in-lieu, compassionate leave, authorized annual leave) and unpaid absence (sabbatical and other unpaid leave). Net hours for admin staff calculated based on 220 days per year. Figures excluding ADLER Solar

Agenda

1. Highlights David Wells CEO

2. Financial review Kim Boman CFO

1. Outlook David Wells CEO

Revenue and adjusted EBIT trend

(1) Full time equivalent. Numbers include contractors on 100% utilization equivalent basis

• (2) Tristein AS included from May 2014; OWC Ltd from July 2014
• (3) Figures excluding ADLER Solar and staff made temporary redundant

Revenue development (USDm) Adjusted EBIT trend (USDm, %)

Adjusted EBIT: Earnings Before Interest and Taxes adjusted for corporate restructuring costs in connection with the IPO in Q3 2014 and goodwill impairments

Geographical split

Revenue split (USDm) EBIT¹ split (USDm)

• Several entities impacted by lower activity level in the oil and gas market. Regional revenue differences y-o-y for entities respectively in Middle East -22%, Far East -54%, Europe -19% and Americas -31%
• 1) After allocation of group costs to entities. Corporate group costs that are not allocated to entities are included in «other»
• 2) Includes share of net income from associates, eliminations and corporate group costs

Income Statement

Amounts in USD thousands	Q3 16	Q3 15	YTD 16	YTD 15	FY 2015
Total operating income	6 364	9 511	21 380	32 243	40 998
Payroll and payroll related costs	(4 280)		(6 126) (15 188) (18 594) (23 717)
Depreciation, amort. and impairment	(48)	(129)	(178)	(526)	(2 027)
Other operating costs	(2 631)	(4 671)		(8 691) (14 052) (17 965)
Total operating expenses			(6 959) (10 926) (24 057) (33 172) (43 709)
Share of net income from associates	(103)	-	(329)	-	(197)
Operating profit (EBIT)	(698)	(1 415)	(3 006)	(929)	(2 908)
Finance income	2	5	17	19	28
Finance costs	(2)	-	(3)	7	(45)
Net currency gains/losses	326	19	(576)	684	1 419
Profit before taxes	(372)	(1 391)	(3 568)	(219)	(1 506)
Taxes	(13)	(72)	(55)	(250)	(692)
Profit after taxes	(385)	(1 463)	(3 623)	(469)	(2 198)
Financial ratios
Operating margin (EBIT), %	(11,0)	(14,9)	(14,1)	(2,9)	(7,1)
Profit after tax, %	(6,0)	(15,4)	(16,9)	(1,5)	(5,4)

• Revenues for Q3 down 33% from Q3 2015, reflecting weaker market conditions
• Operating loss of USD 0.7 million for Q3 2016
• Results for ADLER Solar impacted by lack of larger projects and introduction of new services
• Steps to improve profitability and competitiveness set to continue to take effect both in Aqualis and ADLER Solar

Strong balance sheet

Amounts in USD thousands	30.09.2016	31.12.2015
Equipment	215	371
Investment in associates	3 281	3 283
Intangible assets	17 513	17 119
Deferred tax assets	15	14
Trade receivables	5 640	7 667
Other receivables	2 719	2 876
Cash and cash equivalents	11 091	14 864
Total assets	40 474	46 194
Equity	34 934	37 662
Non current liabilities	643	587
Trade payables	1 486	1 128
Tax payable	15	586
Other current liabilities	3 396	6 231
Total equity and liabilities	40 474	46 194
Financial ratios
Net debt, USD thousands	(11 091)	(14 864)
Equity/Assets ratio, %	86 %	82 %

• Strong financial position, cash of USD 11.1 million
• No interest bearing debt

Cash Flow

Amounts in USD thousands	Q3 16	Q3 15	YTD 16	YTD 15	FY 2015
Operating cashflow		(654) (1 295) (3 534) (2 201) (2 255)
Investing cash flow	-	(81)	(4)		(274) (3 757)
Financing cash flow	-	289	(368)	289	289
Net change in cash and cash equivalents		(654) (1 087) (3 906) (2 186) (5 723)
Cash and cash equivalents beginning period	11 686	20 397	14 864	21 790	21 790
Net change in cash and cash equivalents		(654) (1 087) (3 906) (2 186) (5 723)
Net foreign exchange difference	59	(699)	133		(993) (1 203)
Cash and cash equivalents end period	11 091	18 611	11 091	18 611	14 864

• Net operating cash flow of negative USD 0.7 million mainly related to the operating loss in the period

Agenda

1. Highlights David Wells CEO

2. Financial review Kim Boman CFO

3. Outlook David Wells CEO

Outlook

• The overall oil and gas market is challenging and expected to remain so for the remainder of 2016 and 2017 despite some stability in oil prices
• Positive market development in Brazil through the completion of existing projects, but continued weakness in particular in Europe and the Gulf of Mexico
• The short term outlook for offshore wind in Europe remains good, but the market is still very competitive. Opportunities in emerging markets
• Aqualis aims to continue to strengthen its' market position and opportunities continue to manifest themselves with smaller consultancy work
• ADLER Solar is repositioning its services and organization to target higher margin projects and implementing cost measures to return to profitability
• The target remains to achieve break even EBIT for Q4 2016 subject to current market outlook

Appendix

Top 20 shareholders

#	Name		Shares	%
1	GROSS MANAGEMENT AS		7 281 109	16,74
2	AQUALIS HOLDCO LIMIT		2 187 500	5,03
3	PERSHING LLC MAIN CUSTODY ACCOUNT	NOM	1 964 846	4,52
4	MP PENSJON PK		1 832 628	4,21
5	AGITO HOLDING AS		1 350 000	3,10
6	AQUALIS ASA		1 212 498	2,79
7	BINKLEY CAPITAL AS		1 133 664	2,61
8	Diab Badreddin		1 001 302	2,30
9	TIGERSTADEN AS		897 889	2,06
10	LENOX PHILIP ALAN		830 583	1,91
11	SAXO BANK A/S	NOM	801 156	1,84
12	GISLERØD MAGNE		800 000	1,84
13	J.P. MORGAN BANK LUX JP MORGAN BANK NOM		771 682	1,77
14	SIX SIS AG 25PCT ACCOUNT	NOM	665 159	1,53
15	VERDIPAPIRFONDET DNB		658 176	1,51
16	ALSTO CONSULTANCY LT 1 ST FLOOR 5		598 122	1,37
17	BONNON IAN DENNIS		555 074	1,28
18	THEOFANATOS ANDREAS		512 188	1,18
19	OFFSHORE & MARINE CO		506 500	1,16
20	KULA INVEST AS		504 362	1,16
	Top 20 shareholders		26 064 438	59,91

Source: VPS, 20.10.2016

Global footprint – active in all major oil and gas regions

Energy consultants to the oil & gas, offshore renewable and solar sectors

1) Per September 2016. Including FTE subcontractors but excluding ADLER Solar. Adler Solar has ~100 employees