ABL Group — Investor Presentation 2020

Sep 16, 2020

Pareto Securities 27th Annual Energy Conference

September 2020

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.
• 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 forwardlooking 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 forwardlooking 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.

AqualisBraemar business model

High end consultancy services to the global energy, shipping and insurance industries

Core services

Project consulting Accident prevention Incident management

Global footprint represents unique value to clients

Global footprint provides clients with local expertise and swift response

4 ¹Includes subcontractors on 100% utilisation basis. Calculated as an average during Q2 2020 Map shows partnerships and exclusive subcontractors in addition to AqualisBraemar locations

Successful acquisition of Braemar Technical Services

• Technical Services (BTS)
  • More than doubled the size of the company
  • Diversified revenue base, from ~80% to ~50% oil and gas
  • Expanded interface towards insurance markets
  • Strengthened client offering and global market position

Strong improvement in profitability last 12 months

• Successful integration with significant realised synergies
  • Positive feedback from staff, clients and the markets
  • USD 2.1 million run rate cost synergies to date
  • Initial synergy target raised from USD 1.1 million to USD 2.8 million, to be realised by mid-2021
  • Significantly improved profitability and cash flow

AqualisBraemar business streams

Renewables Offshore Adjusting

Independent engineering and consultancy services to offshore wind industry

• Project management
• Engineering
• Consulting and advisory
• Experience from >80 projects representing total capacity of 58 GW

Engineering and consultancy services to the offshore oil and gas industry

• Marine warranty surveys
• Rig moving (Tow master)
• Transport and installation
• Construction supervision
• Inspections & approvals
• Engineering
• Decommissioning, ++

Worldwide emergency incident response and surveys to marine insurance industry and asset owners

• Hull & machinery surveys
• Casualty investigations
• Condition surveys
• Risk assessments
• Technical due diligence
• Cargo and damage surveys, ++

Loss adjusting and dispute resolution to the onshore and offshore energy insurance markets

• Loss adjusting
• Expert witness
• Dispute resolution
• Servicing upstream and downstream oil and gas, power & utilities, renewables, mining, marine infrastructure, ++

Diversified across regions and services

70% organic growth in renewables revenue from Q2 2019 to Q2 2020

8 Note: No adjustment for intercompany eliminations. Note: Renewables segment defined as activity in OWC entities

Drive growth through continued expansion in the rapidly growing offshore renewables industry

2

Leverage market leading positions within shipping, oil and gas to improve profitability

Consistently return capital to shareholders

Ambition: 50% renewables and ESG driven services in business mix by 2025

1

RENEWABLES

Offshore wind with record investment decisions in 2020

Offshore wind FIDs (USDbn) Market share, Top 3 developers²

• Project final investment decisions in H1 2020 totaling USD 35 billion, up 319% year-on-year and well above 2019's record full-year figure (USD 31.9 billion)
• New geographies and new developers drive demand for project management and consulting

10 Source: 4C Offshore, BNEF, FS-UNEP ¹ By year of offshore commencement. ² Ørsted, Vattenfall, RWE. 3y rolling avg by year of offshore commencement, ex China

RENEWABLES

OWC continues expansion to serve new wind markets

	Market trends	OWC developments in 2020
Poland	• Aims to install 3.8 GW with 10 GW of new capacity awarded by 2030	• Recruited leading Polish offshore wind expert and opening Warsaw office (Q3)
Japan	• Launched first auction – targeting 10 GW new offshore wind capacity built by 2030	• Recruited leading Japanese wind expert and opened Tokyo office (Q2)
S. Korea	• Targeting 12 GW of new offshore wind capacity to be built by 2030	• Relocated respected offshore expert and opened new office in Busan (Q2)
USA	• 16 active commercial leases that could see 23 GW built by 2030	• Recruited leading US offshore wind grid/electrical expert and opened 2nd US office in New York (Q2) • Awarded Mayflower Wind framework agreement (Q3)
Floating	• No longer just R&D: Forecasts of up to 19 GW built by 2030 • Oil majors like Shell, Total and others taking positions in projects and technology	• Awarded owner's engineering of Total's Erebus project • Working on project feasibility assignments & technology reviews from Asia to Europe • Joined World Forum Offshore Wind's Floating Wind Committee alongside Aker Solutions, Innogy, JERA, ++

RENEWABLES

Project: OWC to support Erebus floating wind farm

• OWC contracted to support Total and SBE's 96 MW floating wind project "Erebus" offshore Wales
  • Erebus will be installed at 70 meters water depth using Principle Power's WindFloat technology
• The contract is for a term of approximately three years
  • The scope of work includes owners engineering and project development support
  • Revenue under the awarded contract is expected to exceed USD 6 million over the full term
• Confirms OWC's leading position in floating wind currently working on 4 floating wind projects across 2 continents

Leading position in Offshore, Marine, Adjusting

In 2019, Offshore…

...performed

600+ rig moves globally

300+ …carried out MWS projects

MWS for transportation of FPSO P-67 from China to Brasil

In 2019, Marine…

...received

1,920 instructions globally

…dealt with total repair quantum of

>540 USDm

Cause investigation / salvage operations for capsized RoRo "Golden Ray"

In 2019, Adjusting…

…received

275 instructions globally

all 5 largest …was appointed on casualties in the Lloyd's market

Damage to Pertamina's YY-A platform offshore Indonesia

Staff growth continues with increasing cost base flexibility

Staff level development¹ Comments

• Average staff levels increasing, primarily driven by high activity and recruitment in Renewables
• Subcontractor share at 29% and growing
  • Subcontractor share significantly higher in offshore and renewables than in the less cyclical marine and adjusting divisions
  • The group aims to further increase the subcontractor share to allow for a more flexible cost base
• Targeted recruitment underway for additional technical staff

Strong financial position, freeing up working capital

• USD 11.0 million in cash
• No financial debt
  • Capitalised lease of USD 1.8 million
• Net working capital of USD 26.3 million
  • High focus on reducing high working capital, primarily in legacy BTS business
  • Working capital as % of revenue reduced for the fourth quarter running
  • Targeting ratio below 100% by end 2023
  • Improvements expected to accelerate when unified ERP system is implemented group wide in Q4 2020

Comments Working capital¹ (% of quarterly revenue)

Summary and outlook

• Record profitability and cash flow in Q2 despite challenging business environment
  • Expect lower activity and margins in Q3 due to seasonality and travel restrictions
• Targeting 50% renewables and ESG driven services in business mix by 2025
  • Focus on driving growth of renewables and profitability improvements in mature business
• Mixed market outlook
  • Rapid growth and increasing globalisation in the offshore wind market continues
  • Offshore O&G activity falling in short term amid spending cuts and COVID-19
• Improving capital efficiency and returning cash to shareholders
  • Dividend of NOK 0.2 per share paid in Q2 2020, corresponding to USD 1.5 million
  • The Board expects to pay additional dividend of approx. NOK 0.2 per share during Q4¹
• We will continue to be active in consolidation of energy consultancy industry

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