ABL Group — Investor Presentation 2019

Sep 12, 2019

Pareto Oil & Offshore conference September 12, 2019

aqualisbraemar.com

Disclaimer

• This Presentation has been produced by AqualisBraemar 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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2019 – Creation of a new market leader

Combining two complementary organizations – significant synergies

Energy consultancy with strong market niche positions

3

Carve-out

1

More than a century of experience

Creation of the world's largest independent consultancy to the marine and energy markets

Revenue² : USD 76.0m 48 Offices 33 Countries Employees³ : 440

AqualisBraemar history – Group with roots back to 1856

AqualisBraemar service offering

Offshore Renewables Offshore Oil & Gas Adjusting

• Specialized and globally focused engineering consultancy providing independent services to the offshore wind industry
• Consultancy, engineering & project management services

• Specialist offshore engineering and consultancy services to the offshore oil and gas industry
• Marine Warranty Services
• Construction supervision, transportation and installation, decommission projects, inspections & approvals, engineering services

Marine

• Worldwide emergency casualty, accident or incident response and international marine survey services
• Hull & machinery surveys, casualty investigations, risk assessments, technical due diligence, cargo and damage surveys, etc.

• History dating back to the Salvage Association

• Loss adjusting, risk assessment, legal/expert witness and dispute resolution to the international insurance and reinsurance markets
• Specializing within the energy, marine, mining, renewables, power & utilities industries, etc.

• Hull & machinery surveys, causality investigations, risk assessment, cargo and damage surveys, etc. Combining our commercial, technical, engineering and environmental expertise we provide an unrivalled breadth of skills to the energy, shipping and insurance industries

AqualisBraemar – a leading consultancy focused on adjusting, marine, offshore and renewables

Regional revenue 1H 2019 (%) Business stream revenues 1H 2019(%)

Staff (full time equivalents)

1) AB management estimate

AqualisBraemar global footprint

Successful acquisition of Braemar Technical Services

• Acquisition of the majority of Braemar Technical Services («BTS») completed
• A compelling strategic combination
• Successful rights issue and private placement completed in July 2019
• Integration proceeding according to plan since closing 21 June 2019
• Synergies from functional overlaps, system platforms and joint offices
• Co-location of offices to be completed during Q3 2019
  • Co-location completed in London, Dubai, Singapore, Shanghai and Houston
  • Abu Dhabi office move expected to be completed prior to end of Q3 2019
• Annual run-rate cost synergies target has been increased to USD 2 million from USD 1.1 million

Synergy estimate increased to ~3 USDm

• Progress will be reported
• Synergies phased in over 2 years
• Lower general and administrative costs
• Office and operating structure efficiency improvements
• Information system efficiency improvements
• Operational synergies

Cost synergies (2 USDm) Revenue synergies (USD 0.9m)

• Challenging to monitor and quantify
• Win of projects based on competence, size and footprint – all regions
• Cross sales all business streams and regions
• Focused growth to be in renewables through size and geographical presence

Offshore Renewables

Business stream Offshore Renewables

• Servicing all needs in value chain

Business stream Offshore Renewables

• The offshore wind experience we bring

30 GW >55 projects

10 GW

6 GW

Of projects We have worked on projects world wide since 2011

Consultancy & TDD

Consultancy & TDD for a

We have undertaken

number of projects

21 GW

Geotech & engineering

We have experience of soil conditions world wide. We also optimise, reduce costs and reduce uncertainty of substructure concepts

Subsea cables

We design & evaluate risks of cable routes, determine or evaluate installation methodologies & advise on O&M & repair issues

Project management

We have realised full projects & support developers during preconstruction & construction

3 GW

14 GW

Offshore substations

We can advise on specification, siting, procurement & construction of offshore & onshore transmission assets

Offshore renewables market

• Offshore wind market growing at a rapid pace

Cumulative capacity (MW)¹ Project pipeline (MW) – Ex China¹

Offshore Oil & Gas

Business Stream Offshore

- Services offering cover lifecycle of offshore assets

Marine project / asset lifecycle

	Engineering / Project initiation design phase	Project Construction procurement	Hook-up and commissioning	Asset De management commissioning
e s r e o c h vi s r Off e s	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	Inspection & approvals: Marine warranty services Mooring analyses Condition and suitability surveys / audits DP inspections and audits Jack-up site assessments

Key competencies cover both offshore opex and capex cycles

Business Stream Offshore

• Service and client split

Service split Client split % of revenues last 12 months (1) Rig Moving Marine MWS Operations Other Marine DP Project Cargo Engineer. T&I Project Mgment Rig and vessel owners Offshore contractors/ shipyards NOCs/IOCs Other % of revenues last 12 months (2)

(1): Based on internal figures and management's best estimate

Offshore market

• A small upward trend in offshore activity

Since the start of 2019 we have started to see a increase in rig activity, with increased utilisation and moderate increases in day rates. Contracting has also start to pick up, thus confirming the previous expectaion of increses production and E&P spending.

As AqualisBraemar operates in both CAPEX and OPEX related projects, this should start to filter through in day to day activity in marine operations as well as increased requirements for Marine Warranty Services.

Marine

• Worldwide technical expertise in marine and energy casualties

Services provided Comments

% of revenues last 12 months (1)

• Services offered worldwide by experienced marine engineers, master mariners + naval architects and scientists
• Strong market position within Hull & Machinery ("H&M") which represent the largest share of services provided

(1): Based on internal figures and management's best estimate

(2) Protection & Indemnity

- The Marine surveyors' role in the casualty process

Marine Casualty process

Casualty	Instruction	Survey	Report	Repairs	Settlement
• Vessel suffers casualty • Owners typically notify their Insurance broker or P&I Club	• Brokers notify Insurers • Underwriters or P&I Club instruct a surveyor	• Surveyor attends the vessel • Conducts their investigation based on the nature of loss and the basis of instruction	• Preliminary report sent to the instructing party • Advice offered on repair / salvage options	• Owner undertakes repairs - informs surveyor • Surveyors attend to witness repairs and assess costs	• Surveyors writes a full report on completion of repairs, reviews invoices & provides comments or further advice as required.
Machinery damage	Groundings	Fires and explosions	Collisions / Allisions	Heavy weather	Capsize / sinking

• Key market / macro drivers to observe

Global fleet development Comments

• The global shipping fleet has been in continuous growth since the 1980s
• Relatively stable growth last 5 years
• Short term: Tanker fleet growth trending up, bulkers stable, containership growth trending down

Loss Adjusting

Business stream Adjusting

- Worldwide technical expertise in marine and energy casualties

• AqualisBraemar's adjusting service specialises in the investigation and resolution of insurance claims and commercial disputes.
• Key Services
  • Loss Adjusting
  • Expert Witness
  • Dispute resolution
  • Risk Assessment
• Nature of Incidents
  • Property Damage
  • Control of Well
  • Construction All Risk
  • Liability
  • Pollution
  • Business Interruption / Loss of Hire

Services Sectors covered

Business stream Adjusting

• Nature of claims

(1): Based on internal figures and management's best estimate

(2): «Construction all risk»

Services provided Comments

• Global diversified business revenue evenly split across all regions
• Onshore and offshore property damage («PD») represent the main service provided

Financials

The Combined Group

• Due to the integration progress, from Q3 2019, the presentation will be only AqualisBraemar and not split for legacy entities
• Solid growth in former Aqualis
• Weak performance in BTS impacted by trading losses. Reported figures impacted by restruturing provisions and additional accruals

	Q2 2019			02 2018
USD thousands	Aqualis	Bil S	Combined	Aqualis	Bil S	Combined
Revenues	9.869	9.374	19.243	9.595	9.805	19.400
Adjusted EBIT(1)	479	(211)	268	742	(334)	407
Adjusted EBIT margin	5%	(2%)	1%	8%	(3%)	2%
		1H 2019			1H 2018
USD thousands	Aqualis	BITS	Combined	Aqualis	BTS	Combined
Revenues	18.051	18.592	36,643	17.754	18,932	36,685
Adjusted EBIT(1)	615	(578)	37	939	(282)	657

Highlights Q2 2019 Working capital¹

• Solid financial position with no interest bearing debt and USD 7.8 million in cash
• Working capital increase to USD 27 million due to acquisiton of BTS
• USD 3 million owed to Braemar Shipping Services in connection with the acquisition of BTS
• Negative operational cash flow of USD 2.3 million driven by increased working capital

(%)

(1) Working capital ratio calculated as working capital over average quarterly revenues for last 2 quarters

Selected projects

Business stream Offshore Renewables

• Project Management Services (Taiwan)

The project:

• Confidential Taiwan Offshore Wind project
• c400 MW project
• Jacket-foundation project in a highly seismic area

Client: Confidential

OWC Scope:

• We are embedded into the project team 18 roles including: EPC Director, Foundation Package Manager, Site Conditions Manager, Geotechnical Engineers, Risk Manager, Interface Manager, Transportation and Installation Team, GIS Engineer, Permitting/Environmental Support
• We are using its experience across Europe to advise the Client, help set up controls to understand risk, and reduce CAPEX/DEVEX
• Site Investigation (managed by OWC) completed in 2018
• Design/Certification process ongoing, as well as contract negotiation
• OWC brings deep OW experience, local regulatory knowledge and APAC supply chain knowledge (via AqualisBraemar, group company)

Business stream Offshore Renewables

- Engineering & Project Management Consultancy (UK)

The project:

• SPR's East Anglia ONE project
• 102 X 7- MW WTGs (714 MW project)
• Round 3 project, part of the 7.2 GW East Anglia Zone

OWC Scope:

• Involved deeply with engineering & project management since 2013 (& ongoing) including the following assignments & roles:
• Geotechnical & Structural Engineering (optimised & saved many £m DEVEX)
• Cable route design
• Management of the onshore & offshore transmission package
• Construction Readiness Evaluation prior to offshore works
• Led the development of the O&M readiness workstream
• Met mast decommissioning
• PMC roles in the project include: Senior Foundation Project Manager, Fabrication Manager & Inspectors (Coating & Welding), Onshore Sub-Station Supply & Installation Manager, Offshore Installation Manager, Onshore Electrical Site Manager, Environmental Advisor, HDD Construction Manager, Export Cable Installation Rep, onshore route administrators, Risk Manager

Client: Iberdrola are a Spanish public multinational electric utility company covering four continents.

ScottishPower Renewables (SPR) is their UK utility, which develops and operates onshore & offshore wind projects in the UK.

OWC have worked with SPR/Iberdrola since its founding in 2011.

Business Stream Offshore - Bahrain LNG Terminal Project

– Multi faceted loadout / marine installation operation completed

• Loadout of the 7200 MT topside took place in Thailand onto a smaller installation "Giant 5" barge
• Barge and topside piggy backed onto a large self propelled dry transportation HLV
• Topside and installation barge discharged offshore Bahrain
• Topside installed by floatover within shallower water terminal area
• Installation of the jacket, fabricated in South Korea, was engineered and managed by Aqualis in May 2018

Business Stream Offshore - Project Construction Supervision – Construction Supervision of WTIV OuYang 1 and 2

▪ Aqualis completed the construction supervision of Ouyang Offshore's new-build self-elevating wind turbine installation vessel, OuYang 1, at Dayang Offshore Equipment yard in Jiangsu, China.

▪ Construction supervision for Ouyang Offshore's second wind turbine installation vessel, OuYang 2, is ongoing and is expected to be delivered in Q1 2020.

Business Stream Offshore - Rig Moving Services – Market leader in offshore rig moving activities

• AqualisBraemar are the market leader in jack up rig moving services for both towmaster attendance and Marine Warranty on some 30% of the world's active fleet.
• Cients include ONGC, Seadrill, Shelf Drilling, UMW, Noble Drilling, PV, Jindal, Aban, Saudi Aramco, Borr Drilling, COSL and others.

Business stream Marine -CARNIVAL VISTA (H&M Project)

• CARNIVAL VISTA suffered Azipod damage and required removal from service and drydocking to conduct repairs.
• Our marine team attended and assisted owners in repair planning. (Our offshore team was involved in the MWS)

ME Tankers (H&M War Risk Projects)

• Several recent tanker attacks in the Middle East
• Instructions received from War Risk H&M and P&I underwriters
• Scope of work included provision of an SCR (Special Casualty Representative), salvage experts, advice on repairs and recycling options including relocation tows

Business stream Adjusting

- Offshore Pipeline Construction (GoM)

• Severe weather, loss of vessel position. Unplanned abandonment of Pipeline. Failure of Pipe Recovery Tool
• 685 km natural gas pipeline, offshore GoM

• Acting as loss adjuster. Complex cause investigation

Outlook

• Successful formation of AqualisBraemar will add continued value
  • More robust network of offices and direct exposure to new service lines
  • Merger has been well received by clients and the insurance markets
  • Targeting annual synergies of USD ~3m of which USD 2m in cost synergies
  • Majority of synergies and restructuring will be realized within 12 months from closing
• Positive market outlook
  • Rapid growth and increasing globalisation in the offshore renewables market
  • Marine claims market is performing well and growth in global fleet continues
  • O&G market has stabilized at a low level, growth expected to pick up with increased spending
  • AqualisBraemar is in strong position to win market share, expand and develop new business lines
• Improving capital efficiency and returning cash to shareholders
  • Targeting normal dividend of about 50% of Net Earnings over time (stable and gradually increasing)
  • Potential for extraordinary dividend based on more efficient use of capital
• AqualisBraemar will continue to be active in further consolidation of our industry

Q&A