ABL Group — Investor Presentation 2015

Feb 25, 2015

Aqualis ASA FOURTH QUARTER RESULTS 2014

Oslo, 25 February 2015

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.
• AN INVESTMENT IN THE COMPANY INVOLVES RISK, AND SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION, INCLUDING, AMONG OTHERS, RISKS OR UNCERTAINTIES ASSOCIATED WITH THE COMPANY'S BUSINESS, SEGMENTS, DEVELOPMENT, GROWTH MANAGEMENT, FINANCING, MARKET ACCEPTANCE AND RELATIONS WITH CUSTOMERS, AND, MORE GENERALLY, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS, FLUCTUATIONS IN CURRENCY EXCHANGE RATES AND INTEREST RATES AND OTHER FACTORS.
• 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.

2014 – summary

• Significant progress made during 2014 towards establishing:
• credibility in the market
• a good global office network
• a comprehensive portfolio of blue chip Clients
• Full year revenues (2014 vs 2013) increased approximately 5 fold
• Full time equivalent employees increased 2.5 x over the last 12 months
• Positive operational cash flow during the year
• Strategy going forward will be to maintain organic growth and grow market share

Q4 2014 - highlights

• Total revenues of USD 10.1m in the 4th quarter of 2014
• EBIT of negative USD 0.9m in Q4 2014
• Profit after tax of USD 1.2m. Profit after tax includes unrealized foreign exchange gain of USD 2.1m
• Order back-log of USD 19.7m as of end December 2014
• Cash and cash equivalents of USD 21.8m at 31 December 2014; no interestbearing debt
• The Company had 196 employees* as of end December 2014
• Continued high investment in growth and regional expansion
• Multiple contract awards during the quarter across business lines

FY 2014 - highlights

• Total revenues of USD 31.9m in 2014
• EBIT of negative USD 2.1m in 2014. EBIT YTD includes one-off costs related to restructuring and listing of USD 1.4m. Adjusted EBIT for FY 2014 is negative USD 0.7m
• Profit after tax of negative USD 0.3m. Profit after tax includes unrealized foreign exchange gain of USD 2.1m. Profit after tax adjusted for costs related to restructuring and listing is USD 1.1m

Revenues – quarterly development

USDm

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:

• Aqualis concluded a delayed renewables project in January 2015. Cash compensation of approx. USD 405k was received in January 2015. The fair value of this compensation was recognized in the financial statements in relation to purchase price allocation at the time of acquisition and will consequently have no effect on the consolidated profit and loss in 2015
• Tristein AS merged into Aqualis Offshore AS in order to streamline the Norwegian operations. Effective date of the merger is 1 Jan 2015

Q4 2014 – main new O&G contract wins

• A MWS contract with Technip for work associated with an FPSO
• The basic design of a 4 legged liftboat (OM-100 Class) for an Asian Client covering structural engineering and naval architecture scopes
• Supporting the marine operations associated with the pilotage and berthing of one of the world's largest floating dry docks into a Middle Eastern port
• A floatover topside integration feasibility study for a major Asian shipyard
• Engineering consultancy associated with 2 x FPSO projects in Brazil
• As marine consultant / MWS for a Mexican company covering the transportation of modular rigs
• Jack up rig structural site specific assessments and suitability on behalf of a European based oil company
• An MSA was signed with Parker Drilling of Houston

Q4 2014 – main new renewables contract wins

• Provision of offshore marine representation to a major European power utility company
• Additional consultancy support to a significant German power utility company
• Additional support to a fast growing UK based power utility supplier
• Site investigation reviews and lift-boat site specific assessments for another UK based power utility supplier

Company development

Marine & engineering consultancy services

* Tristein AS will be merged with Aqualis Offshore AS with effective date 1 January 2015

Global presence – covering all major oil regions

FINANCIAL HIGHLIGHTS

Q4 2014 – key figures

	2014	2013	2014	2013
(USD million)	Q4	Q4*	FY	FY*
Total revenues	10.1	2.2	31.9	2.2
EBIT	-0.9	-0.9	-2.1	-0.9
EBIT adjusted**	-0.9	-0.9	-0.7	-0.9
Net profit	1.2	-0.9	-0.3	-0.9
	1.2
Net profit adjusted**		-0.9	1.1	-0.9
Cash and cash equivalents	21.8	0.8	21.8	0.8
Interest bearing debt	-	-	-	-
Number of outstanding shares (thousands)	43 191		43 191

* figures for FY 2013 represent historical figures from Weifa ASA's (former Aqualis ASA) group accounts related to the spin-off of the Aqualis Offshore business. Aqualis Offshore which is now part of Aqualis ASA group was acquired by Weifa ASA in November 2013. Thus, no financial data is shown for the period prior to the acquisition in November 2013.

** adjusted by one-off costs in Aqualis ASA of USD 1.4m in third quarter 2014, relating to corporate restructuring and listing

Solid financial position (31.12.14)

USDm	Q4 2014	FY 2014
Operating cash flow	0.6	0.4
One-off items*	-	1.4
Adj. operating cash flow	0.6	1.8
Investing cash flow	-0.2	1.2
Financing cash flow	-	19.4
Cash beg. of period	21.4	0.8
Change in cash & cash equiv.	0.4	21.0
Cash end of period	21.8	21.8

• Operating cash flow in the quarter was USD 0.6m. FY 2014 was USD 0.4m; adj. FY 2014* was USD 1.8m
• Investing cash flow of negative USD 0.2m in the quarter - limited capex (as expected). FY 2014 of USD 1.2m affected by acquisition of subsidiaries (net of cash) of USD 1.9m
• Financing cash flow of nil in Q4 2014. FY 2014 was USD 19.4m
• Foundation capital (USD 167k)
• Net proceeds from cash contribution (USD 10.5m)
• Contribution in kind (USD 8.8m)**
• Change in cash for the quarter of USD 0.4m. FY 2014 was USD 21.0m

* USD 1.4m 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:

• Recent oil price fall creating some investment uncertainty in high cost projects and deep-water developments
• Middle East, including India, and Asian Pacific markets still appear very strong and likely to remain the drivers going forward
• 2015 strategic main focus will be on offshore operations and gaining market share from competitors

Micro:

• Continued focus on developing business line deliverables from existing offices
• Continued focus on maintaining organic growth through recruitment of quality experienced staff
• Further selective expansion of global office network expected in H1 2015. Preparation being laid for expansion into North Sea, European and west African markets
• Aim to maintain momentum on marine operations, notably rig moving, in all markets
• Streamlined Norwegian operations through amalgamation of Tristein operations into Aqualis Offshore AS will improve efficiencies
• Major upside potential apparent for Mexican office operations
• Good opportunities identified in China for both Group and local offices
• Material new engineering opportunities identified and being bid
• Short term outlook in Brazil uncertain

2014 – summary

• Significant progress made during 2014 towards establishing:
• credibility in the market
• a good global office network
• a comprehensive portfolio of blue chip Clients
• Full year revenues (2014 vs 2013) increased approximately 5 fold
• Full time equivalent employees increased 2.5 x over the last 12 months
• Positive operational cash flow during the year
• Strategy going forward will be to maintain organic growth and grow market share

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 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 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 & Mooring analysis audits Jack-up site assessments	approvals: Marine warranty services Condition and suitability surveys / DP inspections and audits

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 $\blacktriangledown$	Percentage ≑ Name ≑		Account type ≑ 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 BNY MELLON SA/NV		IRL
1,592,701		3.69 JP MORGAN CLEARING C A/C CUSTOMER SAFE KE NOM		USA
1,340,963		3.10 FERNCLIFF LISTED DAI		NOR
1,292,068		2.99 VERDIPAPIRFONDET DNB		NOR
1,190,105		2.76 QVT FUND V LP I BNY MELLON SA/NV		CYM
1,133,664		2.62 BINKLEY CAPITAL AS		NOR
1,093,750		2.53 AS FERNCLIFF		NOR
814,648		1.89 Diab Badreddin		GBR
745,742		1.73 T10 INVEST AS		NOR
700,000		1.62 AGITO HOLDING AS		NOR
684,533		1.58 SAXO BANK A/S	NOM	DNK
669,744		1.55 SIX SIS AG 25PCT ACCOUNT	NOM	CHE
653,929		1.51 LENOX PHILIP ALAN		GBR
644,599		1.49 AMAN MARINE LIMITED		GBR
598,122		1.38 ALSTO CONSULTANCY LT 1 ST FLOOR 5 DEKK H		SYC
555,074		1.29 BONNON IAN DENNIS		GBR
512,188		1.19 THEOFANATOS ANDREAS		BRA
25,972,444	60.12

Ferncliff and associated companies: approx. 24%

Management and employees: approx. 23%

Consolidated statement of comprehensive income

		2014	2013	2014	2013*
(USD '000)	Note	Q4	Q4		01.01-31.12 01.11.-31.12
Revenue		10 132	2 2 4 1	31937	2 2 4 1
Other income		-50	٠		$\sim$
Total operating income		10 082	2241	31937	2 2 4 1
Payroll and payrol related costs	7	6 20 6	1790	18563	1790
Depreciation, amortisation and impairment		268	110	900	110
Other operating costs		4476	1 278	14 57 5	1 278
Total operating expenses		10 950	3 178	34 038	3 178
Operating profit/loss (EBIT)		$-868$	$-937$	$-2101$	$-937$
Finance income	5	2 1 3 4	124	2 2 6 7	124
Finance costs		82	60	205	60
Profit/(Loss) before tax		1 1 8 4	$-873$	$-39$	$-873$
Income tax expense		$-19$		211
Profit/(Loss) after tax		1 203	$-873$	$-250$	$-873$
Earnings per share (USD): basic and diluted		0.03		-0.01
Other comprehensive income/(loss)
Other comprehensive income to be reclassified to profit or loss in subsequent periods
Currency translation differences		$-7361$	65	$-8834$	65
Income tax effect			$\sim$
Total comprehensive income/(loss) for the period		$-6158$	$-808$	$-9084$	$-808$
Total comprehensive income/(loss) for the year, net of tax attributable to:
Equity holders of the parent company		$-6158$	-808	$-9084$	$-808$
Non-controlling interests Total		$-6158$	$\ddot{\phantom{0}}$ $-808$	$-9084$	$\sim$ $-808$

* Figures for 2013 represent historical figures from Weifa ASA's (former Aqualis ASA) group accounts related to the spin-off of the Aqualis Offshore business. Aqualis Offshore which is now part of Aqualis ASA group was acquired by Weifa ASA in November 2013. Thus, no financial data is shown for the period prior to the acquisition in November 2013

Consolidated statement of financial position

(USD '000)	Note		31.12.2014 31.12.2013*
ASSETS
Non-current assets Equipment		629	372
Intangible assets	4	20 710	15 364
Investment in associates
Total non-current assets		21 339	15 7 36
Current assets Trade receivables		5372	2 107
Other receivables		2990	1 2 1 9
Cash & cash equivalents	5	21 7 9 0	838
Total current assets		30 152	4 165
Total Assets		51 491	19 901
EQUITY AND LIABILITIES Equity
Share capital	6	702	0
Share premium		47 058	0
Other paid in capital		2909	15 3 64
Retained earnings Total equity		$-6222$ 44 4 4 7	$-3029$ 12 3 35
Non-current liabilities
Borrowings
Other long-term liabilities		320	5 1 7 4
Total non-current liabilities		320	5 1 7 4
Current liabilities
Trade payables		1 3 7 0	602
Other current liabilities		5 3 5 4	1789
Total current liabilities		6724	2 3 9 1
Total liabilities		7044	7 5 6 5
Total Equity and Liabilities		51 491	19 901

* Figures for 2013 represent historical figures from Weifa ASA's (former Aqualis ASA) group accounts related to the spin-off of the Aqualis Offshore business. Aqualis Offshore which is now part of Aqualis ASA group was acquired by Weifa ASA in November 2013. Thus, no financial data is shown for the period prior to the acquisition in November 2013

Consolidated cash flow statement

(USD '000)	Note	2014 Q 4	2013 $\Omega$ 4	2014	2013* 01.01-31.12 01.11-31.12
Cash flow from operating activities
Net profit/(loss) before income tax		1 1 8 4	$-873$	$-39$	$-873$
Non-cash adjustment to reconcile profit before
tax to cash flow:
Estimated value of employee share options		73		178
Depreciation, amortisation and impairment		268	110	900	110
Changes in working capital:
Changes in trade receivables and trade creditors		1 502	143	$-1.587$	143
Changes in deferred income		$\overline{\phantom{a}}$	$\sim$
Changes in other accruals		$-370$	$-1060$	881	$-1060$
Effect related to acquisition of subsidaries		÷,		2 147
Net interest (income)/expense		-9	$-184$	$-65$
Effects related to currency (unrealized)		$-2050$	$-64$	$-2050$	-64
Net cash flow from operating activities		598	$-1928$	365	$-1744$
Cash flow from investing activities
Purchase of equipment		$-182$	$-130$	$-766$	$-130$
Acquisition of subsidiaries, net of cash				1858
Interest received		9	124	65	124
Net cash flow from investing activities		-173	$-6$	1 1 5 7	$-6$
Cash flow from financing activities
Proceeds from share issue				10 642
Proceed from contribution in kind				8788
Transaction costs on share issue			٠
Borrowings			1 174		1 174
Interest paid			$-60$		$-60$
Net cash flow from financing activities			1 1 1 4	19 430	1 1 1 4
Net change in cash and cash equivalents		425	$-636$	20 952	$-636$
Cash and cash equivalents beginning period		21 365	1474	838	1474
Cash and cash equivalents end period		21 790	838	21 790	838

* Figures for 2013 represent historical figures from Weifa ASA's (former Aqualis ASA) group accounts related to the spin-off of the Aqualis Offshore business. Aqualis Offshore which is now part of Aqualis ASA group was acquired by Weifa ASA in November 2013. Thus, no financial data is shown for the period prior to the acquisition in November 2013

Segment information

(USD '000)	Q4 2014			Q4 2013
	Marine & Offshore	HQ.	Total	Marine & Offshore	HQ	Total
Revenues
Norway	2 1 2 3		2 1 2 3	282		282
Singapore	3 2 5 3		3 2 5 3	810		810
UAE	2791		2791	585		585
USA	988		988	241		241
Brazil	625		625	459		459
UK	1 0 2 7		1 0 2 7	9		9
China	35		35
Mexico	32		32
E limination	$-742$		$-742$	$-145$		$-145$
Total revenue	10 132	$\overline{\phantom{a}}$	10 132	2 2 4 1	$\overline{\phantom{a}}$	2 2 4 1
Operating profit (E BIT)
Norway	$-256$ 505	$-429$	$-685$ 505	$-235$ $-81$		$-235$ -81
Singapore	$-124$			$-190$
UAE USA	144		$-124$ 144	$-95$		$-190$ $-95$
Brazil	$-122$		$-122$	$-18$		$-18$
UK	$-331$		$-331$	$-254$		$-254$
China	$-135$		$-135$
Mexico	$-24$		$-24$
Elimination	$-96$		-96	$-64$		$-64$
Total operating profit (EBIT)	$-439$	$-429$	-868	$-937$	÷	-937
EBITDA	$-171$	$-429$	$-600$	$-827$	$\overline{a}$	$-827$
Depreciation and amortisation	$-268$		$-268$	$-110$	$\overline{\phantom{0}}$	$-110$
Operating profit/loss (EBIT)	$-439$	$-429$	$-868$	$-937$	ä,	$-937$
Assets
Current operating assets	8 3 6 2	÷	8 3 6 2	3 3 2 6	÷	3 3 2 6
Non-current operating assets	21 339	٠	21 339	15736	÷	157736
Operating assets	29 701	÷,	29 701	19 062	÷,	19 062
Cash and interest-bearing recievables	5 1 7 4	16 616	21 790	838	$\overline{\phantom{a}}$	838
Total assets	34 875	16 616	51 491	19 901	÷,	19 901
Liabilities
Current operating labilities	6 2 9 7	107	6404	2 3 9 1	٠	2 3 9 1
Non-current operating liabilities	320		320
Operating liabilities	6617	107	6724	2 3 9 1	÷,	2 3 9 1
Net interest bearing borrowings				5 1 7 4		5 1 7 4
Total liabilities	6617	107	6724	7565	٠	7565