ABL Group — Investor Presentation 2014

Oct 29, 2014

Aqualis ASA THIRD QUARTER RESULTS 2014

Oslo, 29 October 2014

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.
• This Presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. 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 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. None of the Company or any of its parent or subsidiary undertakings or any such person's officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company assumes no obligation, except as required by law, to update any forward-looking statements or to conform these forward-looking statements to our actual results.
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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.
• By attending or receiving this 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 be solely responsible for forming your own view of the potential future performance of the Company's business. This Presentation does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation in such jurisdiction.

Q3 2014 - highlights

• Total revenues of USD 10.7m in the 3rd quarter of 2014
• Adjusted EBIT of USD 0.3m in Q3 2014 (negative EBIT of USD 1.1m for the 3rd quarter after USD 1.4m one-off costs related to restructuring and listing)
• Order back-log of approx. USD 22m as of end September 2014
• Cash and cash equivalents of USD 21.4m at 30 September 2014; no interest-bearing debt
• The Company had 166 employees* as of end September 2014
• Continued high investment in growth and regional expansion (13 offices in 10 countries)
• Aqualis Offshore Holding ASA was listed on Oslo Stock Exchange on 13 August 2014
• Aqualis Offshore Holding ASA changed name to Aqualis ASA on 20 August 2014
• Aqualis established operations in Mexico through a newly formed subsidiary Aqualis Offshore S. de R.L. de C.V.
• The Company signed a rig moving services contract with Saudi Aramco, the world's largest energy company

^* Includes contractors on 100% utilization equivalent basis

Revenues – quarterly development

Notes:

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

Recruitment – quarterly development

Number of employees

Notes:

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

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

Subsequent events:

14 October 2014, Aqualis Offshore announced that following a multi-site assessment by Lloyd's Register Quality Assurance (LRQA), the company was been successful in achieving ISO 9001:2008 certification

Q3 2014 – main new contract wins

• a 3 year contract with Saudi ARAMCO to provide jack up rig movers
• a 3 year with 1 year option call out marine consultancy contract with Total ABK of Abu Dhabi
• a 9 month (renewable) marine warranty services (MWS) contract from ONGC to attend on all owned rig moves offshore India
• completion of the Newfield LF7-2 topside floatover project offshore China following our retention as MWS on behalf of London underwriters
• a detailed design engineering contract with an Indian client for the conversion and upgrade of 2 jack up drilling units into MOPU's. Work for one unit will be undertaken in our Houston office and for the other in Dubai
• the reactivation works associated with the bringing a stacked jack up drilling rig from offshore in the Gulf of Mexico into a shipyard and subsequent loadout onto a heavy lift vessel for transportation to the Far East for conversion into a MOPU
• commencement of a contract to effect the basic engineering of an OM 100-4 design lift boat in Houston
• two large technical due diligence vessel inspection contracts for a vessel operator and a major financial institution based in Norway
• MSAs signed with Nabors Drilling and MMHE (Malaysia)

Company development

Marine & engineering consultancy services

Global presence – covering all major oil regions

FINANCIAL HIGHLIGHTS

Q3 2014 – key figures

	2014	2013	2013
(USD million)	Q 3	Q3	FY
Total revenues	10.7		2.2
EBIT	$-1.1$		$-0.9$
EBIT adjusted*	0.3		$-0.9$
Cash and cash equivalents	21.4		0.8
Interest bearing debt
Number of outstanding shares (thousands)	43 191

Solid financial position (30.09.14)

USDm	Q3 2014
Operating cash flow	-1.1
One-off items*	1.3
Adj. operating cash flow	0.2
Investing cash flow	-0.2
Financing cash flow	19.3
Cash beg. of period	3.4
Change in cash & cash equiv.	18.0
Cash end of period	21.4

• Operating cash flow in the quarter adjusted for one-off items was positive: USD 0.2m
• Limited cash expenditure on capex (as expected) in the quarter
• Aqualis had a positive net financing cash flow of USD 19.3m in Q3 2014
• Net proceeds from cash contribution (USD 10.5m)
• Contribution in kind (USD 8.8m)**

* USD 1.3m one-off cash outflow during Q3 2014 related to restructuring and listing

** Financial assets representing a part interest in the prepayment in relation to Weifa ASA's (former Aqualis ASA) acquisition of Weifa AS

OUTLOOK

Outlook – top-line growth & increased profitability

Market:

• Continued good global activity in all market segments expected
• Limited signs of long term slowdown have yet manifested themselves through workload

Micro:

• Expect continued top-line growth in Q4 and throughout 2015 and gradual normalization of EBIT margins
• Strategic emphasis still being maintained on organic growth within key markets
• Significant engineering opportunities being bid to Middle East and Asia Pacific clients
• Expecting a Q4 ramp-up of rig moving operations offshore India and general increase globally
• Office open in Mexico City and good opportunities being identified with some attendances offshore already undertaken
• Merging Tristein and Aqualis Offshore operations in Norway into single streamlined entity
• Opportunistically seeking M&A targets on a selective basis

Aqualis ASA APPENDIX

aqualis.no

Corporate structure

* In KSA / Bahrain, Aqualis operates through agency agreement with AET

**The company is 100% controlled by Aqualis Offshore

Executive Management & Board of Directors

Executive Management Board of Directors

David Wells, CEO

Has more than 30 years experience in the offshore sector with particular focus on offshore operations, MWS and marine consultancy. Specialist on jack up operations, location approvals and all aspects of rig moving. More recently involved in senior management duties. Based in London.

Christian Opsahl, CFO

Extensive international finance, investment banking and private equity experience within the global financial markets, together with industrial experience from companies servicing the offshore oil and gas markets. Based in Norway.

Glen Rødland, Chairman

Director and co-investor Direct Active Investments in Ferncliff TIH AS. Mr. Rødland has PhD studies in Finance from NHH and UCLA. He has worked within management consulting, portfolio management and investment banking. Mr. Redland's experience is mainly in Energy, Basic Materials and Shipping.

Reuben Segal

Mr. Segal is the Director Middle East for Aqualis Offshore and has almost 20 years' experience in the offshore and shipping sectors covering both engineering design and ship surveying. He is a naval architect, and has extensive recent global business development experience with focus on design and construction of offshore oil and gas.

Yvonne L. Sandvold

She is the Chief Operating Officer of Frognerbygg AS, and has extensive experience from the Norwegian real estate industry. Ms Sandvold currently serves on the Board of several private companies.

Øystein Stray Spetalen

He is Chairman and owner of investment firm Ferncliff TIH AS, and an independent investor. He has worked in the Kistefos Group as an investment manager, as corporate advisor in different investment banks and as a portfolio manager in Gjensidige Forsikring.

Synne Syrrist

She is an independent business consultant, and has extensive experience as a nonexecutive director. She has previously worked as a financial analyst at Elcon Securities and First Securities, and currently serves on the Board of several public companies, including Awilco Drilling Ltd and Eidesvik Offshore ASA.

Martin Nes (Deputy member)

He is CEO and Partner of investment firm Ferncliff TIH AS. Has previously worked several years for the Norwegian law firm Wikborg Rein, both in their Oslo and London offices, and for the shipping law firm Evensen & Co. Mr Nes' experience is especially within the shipping and offshore industry. Mr Nes joined Ferncliff in March 2008.

The combined group

Strengthened position in a growing market space

Enhanced services through sharing of knowledge, resources and expertise

Stronger foothold in the offshore wind industry

Utilisation of the group's global network

Complete life cycle involvement with offshore assets

Marine project / asset life cycle

	Engineering / Project initiation design phase	Project Construction procurement	Hook-up and commissioning	Asset De commissioning management
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 New-builds + conversions & upgrades Due diligence / compliancy; financial community focus	Marine operations: Transport and installation services; "moving of offshore assets" Rig moving Float-overs Site attendance & procedure management	Inspection & approvals: Marine warranty services Mooring analysis Condition and suitability surveys / audits DP inspections and audits Jack-up site assessments

Aqualis' key competencies are conjointly exposed to both offshore opex and capex cycles

Offshore operations are key for all business lines

• Jack up engineering (basic design, upgrade and conversion)
• FPSO marine engineering
• Construction supervision
• Engineering design and consultancy
• Key staff provision

«Doing» Offshore operations «Observing»

• Moving of rigs
• Offshore Construction Projects
• Transportation & installation
• Marine Warranty Services (MWS)
• FPSO/MOPU engineering and installation

• Towages

• Technical Due diligence

• DP FMEAs and audits
• Vessel inspections and surveys
• Marine and engineering approvals
• Site assessments
• Engineering reviews / verifications
• Marine consultancy

Selected clients

Top 20 shareholders

Holding	Percentage (%)	Name	Citizenship
5 450 973	12,62	STRATA MARINE & OFFS	NOR
2 350 169	5,44	GROSS MANAGEMENT AS	NOR
2 187 500	5,06	AQUALIS HOLDCO LIMIT	GBR
1 761 972	4,08	ARCTIC FUNDS PLC	IRL
1 475 000	3,42	VERDIPAPIRFONDET DNB	NOR
1 363 498	3,16	DEUTSCHE BANK AG	GBR
1 340 963	3,10	FERNCLIFF LISTED DAI	NOR
1 135 666	2,63	JP MORGAN CLEARING C	USA
1 093 750	2,53	AS FERNCLIFF	NOR
1 074 702	2,49	BINKLEY CAPITAL AS	NOR
814 648	1,89	DIAB BADREDDIN	GBR
696 286	1,61	T10 INVEST AS	NOR
653 929	1,51	LENOX PHILIP ALAN	GBR
650 000	1,50	PORTIA AS	NOR
646 023	1,50	SAXO PRIVATBANK A/S	DNK
644 599	1,49	AMAN MARINE LIMITED	GBR
598 122	1,38	ALSTO CONSULTANCY LT	SYC
555 074	1,29	BONNON IAN DENNIS	GBR
512 188	1,19	THEOFANATOS ANDREAS	BRA
468 594	1,08	REWAL AS	NOR
25 473 656	58,98

Ferncliff and associated companies: ~24%

Management and employees: ~24%

Consolidated Statement of Comprehensive Income

(USD '000)	Note	2014 Q3	2013 Q3	2014	2013 01.01-30.09 01.01-30.09	$2013^*$ 01.11.-31.12
Revenue		10720	٠	21 805	٠	2241
Other income				50		o
Total operating income		10720	$\blacksquare$	21 855	٠	2241
Payroll and payroll related costs	7	5437	٠	12 3 5 7	٠	1790
Depreciation, amortisation and impaiment		223	$\tilde{\phantom{a}}$	632	۰	110
Other operating costs		6 2 0 5	$\sim$	10 099	٠	1278
Total operating expenses		11865	$\blacksquare$	23 088		3178
Operating profit/loss (EBIT)		$-1145$	$\blacksquare$	-1 233	٠	$-937$
Finance income		52	٠	133		124
Finance costs		7	٠	123	۰	60
Loss before tax		$-1100$	$\overline{\phantom{a}}$	-1 223	۰	-873
Income tax expense		87	٠	230	٠	$\overline{\phantom{a}}$
Profit/(Loss) for the period		$-1187$	$\blacksquare$	-1 453		-873
Other comprehensive income
Other comprehensive income to be reclassified to profit or loss in subsequent periods
Currency translation differences		$-1246$	٠	-1473		65
Income tax effect			٠			$\overline{\phantom{a}}$
Total comprehensive income for the period		$-2433$	$\overline{\phantom{a}}$	$-2926$	÷	$-808$
Total comprehensive income for the year, net of tax attributable to:
Equity holders of the parent company		$-2433$	$\blacksquare$	$-2926$		$-808$
Non-controlling interests		٠	$\blacksquare$		٠	$\overline{\phantom{a}}$
Total		$-2433$	$\blacksquare$	$-2926$	÷	$-808$
Earnings per share (USD): basic and diluted		0.0	0,0	0,0	0.0	0.0

Consolidated Statement of Financial Position

(USD '000)	Note	30.09.2014		30.09.2013 31.12.2013*
ASSETS
Non-current assets
Equipment		643	$\overline{a}$	372
Intangible assets	4	22 217	٠	15 3 64
Investment in associates		32
Total non-current assets		22 892	$\blacksquare$	15 736
Current assets
Trade receivables Other receivables		6896 3 0 8 1	٠	2 107 1 2 1 9
Cash & cash equivalents	5	21 3 65		838
Total current assets		31 342		4 1 6 5
Total Assets		54 234	÷	19 901
EQUITY AND LIABILITIES
Equity
Share capital	6	702	۰	0
Share premium		46728		0
Other paid in capital		2836 $-3376$		15 3 64 $-3029$
Retained earnings		46 890	۰	12 3 35
Total equity			$\overline{\phantom{0}}$
Non-current liabilities
Borrowings			۰
Other long-term liabilities		247		5 1 7 4
Total non-current liabilities		247	L.	5 1 7 4
Current liabilities
Trade payables		1409		602
Other current liabilities		5689		1 7 8 9
Total current liabilities		7098	٠	2 3 9 1
Total liabilities		7 3 4 5	÷	7 5 6 5
		54 234		19 901
Total Equity and Liabilities			÷,

Consolidated Cash Flow Statement

(USD '000)	Note	2014 O3	2013 O3	2014 01.01-30.09	2013 01.01-30.09	$2013*$ 01.11-31.12
Cash flow from operating activities
Net loss before income tax		$-1100$		$-1223$		-873
Non-cash adjustment to reconcile profit before tax to cash fow:
Estimated value of employee share options		105		105
Depreciation, amortisation and impairment		223		632		110
Changes in working capital:
Changes in trade receivables and trade creditors		-739		$-3089$		143
Changes in deferred income		$\sim$	۰
Changes in other accruals		492		1052		$-1000$
Effect related to acquisition of subsidaries				2.147
Net interest (income)/expense		$-45$		$-10$		-64
Net cash flow from operating activities		$-1064$		$-386$		$-1744$
Cash flow from investing activities
Purchase of equipment		-282		-584		$-130$
Acquisition of subsidiaries, net of cash				2057
Interest received		52		133		124
Net cash flow from investing activities		$-230$		1 606		$-8$
Cash flow from financing activities
Proceeds from share issue		10475		10 642
Proceed from contribution in kind		8788		8788
Transaction costs on share issue
Borrowings				$\blacksquare$		1174
Interest paid		-7	٠	$-123$		-80
Net cash flow from financing activities		19256	٠	19 30 7		1114
Net change in cash and cash equivalents		17962		20 527		-636
Cash and cash equivalents beginning period		3 4 0 3	$\blacksquare$	838		1474
Cash and cash equivalents end period		21385	÷.	21 3 8 5		838

Segment information

(USD'000)		Q3 2014			Q3 2013			2013
	Marine & Offshore	HQ	Total	Marine & Offshore	HQ	Total	Marine & Offshore	HQ	Total
Revenues
Noway	2554	٠	2554				282	÷	282
Singapore	3546		3 5 4 6				810		810
UAE	2434		2434				585		585
USA	1655		1 655				241		241
Brazil	772		$\pi$				459		459
UК	961		961				э		9
China	16		16
Mexico
Elimination	$-1218$		-1.218				$-145$		$-145$
Total revenue	10720	$\overline{\phantom{a}}$	10 720				2 241	ä,	2 2 4 1
Operating profit (EBIT)
Noway	192	$-1695$	-1 503				$-235$		-235
Singapore	553		553				$-81$		$-81$
UAE	78		78				$-190$		$-190$
USA	189		189				-95		$-95$
Brazil	$-32$		$-32$				$-18$		$-18$
UК	$-100$		$-100$				$-254$		-254
China	-272		$-272$
Mexico	-58		$-58$
Elimination	٠		۰				-64		$-64$
Total operating profit (EBIT)	550	$-1695$	$-1145$	$\ddot{\phantom{0}}$	$\tilde{\phantom{a}}$		$-937$	ä,	$-937$
EBITDA	773	$-1695$	$-922$				$-827$	٠	$-827$
Depreciation and amortisation	-223		$-223$				$-110$		$-110$
Operating profit/loss (EBIT)	550	$-1695$	-1 145	$\ddot{\phantom{0}}$	÷.	÷	$-937$	ä,	$-937$
Assets
Current operating assets	9977		9 977				3 3 2 6		3326
Non-current operating assets	22892	٠	22 892	٠		$\blacksquare$	15736	$\blacksquare$	15736
Operating assets	32869		32 869	$\tilde{\phantom{a}}$		$\blacksquare$	19 062	÷	19 062
Cash and interest-bearing recievables	4241	17 124	21 365	$\sim$			838	$\blacksquare$	838
Total assets	37 110	17 124	54 234	$\sim$		٠	19 901	٠	19 901
Liabilities
Current operating liabilities	7017	81	7098				2 3 9 1	ä,	2391
Non-current operating liabilities	247		247
Operating liabilities	7 2 6 4	81	7 3 4 5	$\blacksquare$		$\blacksquare$	2 3 9 1	÷	2391
Net interest bearing borrowings	۰	$\overline{\phantom{a}}$		۰		$\overline{\phantom{a}}$	5 174		5174
Total liabilities	7 2 6 4	81	7 3 4 5	ä,	$\mathbf{r}$	$\overline{\phantom{a}}$	7565	ä,	7565