Akastor — Earnings Release 2015

Feb 17, 2016

Q4 & PRELIMINARY ANNUAL RESULTS 2015

Kristian Røkke and Leif Borge Oslo | February 17, 2016

Agenda

FOURTH QUARTER HIGHLIGHTS Kristian Røkke CEO

FINANCIALS Leif Borge CFO

Q & A Kristian Røkke and Leif Borge

Highlights

EBITDA of NOK 552 million

• − Normalized EBITDA of NOK 231 million
• − Real estate gain of NOK 310 million

Financial position strengthened

• − Real estate cash release of NOK 1.2 billion
• − Working capital reduced by NOK 0.6 billion
• − Liquidity reserve of NOK 2.6 billion
• Significant measures taken in face of challenging market conditions

EBITDA • NOK 552 million NIBD NOK 4.9 billion Order Backlog NOK 15.6 billion

Portfolio highlights

	Lower activity level among clients affecting revenues, especially within staffing  Stable EBITDA margin, lower activity level offset by capacity adjustments   Five year contract with Aker Solutions announced in February 2016
	 Skandi Santos close to full utilization Aker Wayfarer undergoing conversion at a yard in Norway  AKOFS Seafarer idle during the fourth quarter 
	 Record strong earnings during fourth quarter  Growth in service revenue on installed base  Challenging market situation in Americas
	High margins due to improved operational performance and cost efficiency   Low order intake as a result of weak market conditions  Headcount reductions implemented at Batam facility
Other holdings	 Real estate portfolio sold for NOK 1 243 million in the quarter

MHWirth highlights

Weak earnings, strong NCOA reduction

• − Normalized EBITDA of NOK 34 million
• − Strong lifecycle services performance
• − Working capital reduction of NOK 682 million

Brazil situation remains uncertain

• − Work on the last four Sete units on hold
• − Plant in Macaé, Brazil completed

Cost base reduced substantially

• − Headcount reduction of 54% since YE 2014
• − Cost base reduced by NOK 1.7 billion
• − New and simplified organizational structure
• − Finn Amund Norbye appointed CEO

Business environment

E&P spending pressure continues

• − E&P spending expected down 20-30% in 2016
• − Visibility remains low
• − Cost deflation gaining momentum

Drilling market remains challenging

• − Utilization rates at lowest levels in 20+ years
• − Continued fleet attrition in 2016 and 2017
• − Offshore well costs significantly down

Areas of opportunity

• − Increased portfolio footprint in the Middle East
• − Increased interest for innovative product offerings to reduce cost
• − M&A opportunities expected to increase

Offshore E&P spending (USDbn)1

Rig Utilization2

(1) DNB Equity Research, January 2016; (2) Clarksons Platou Rig Monthly, December 2015

Akastor as an investment company

Satisfactory financial position

• − Secured refinancing commitment
• − Comfortable liquidity position
• − Certain restrictions on dividends, new debt and acquisitions

Attractive value potential in Akastor portfolio

• − Strong market positions across portfolio
• − Untapped business extension opportunities
• − Earnings headwinds in 2016

Flexible mandate offers unique advantages

• − Flexible ownership time horizon
• − Transaction structure flexibility Book

Agenda

FOURTH QUARTER HIGHLIGHTS Kristian Røkke CEO

FINANCIALS Leif Borge CFO

Q & A Kristian Røkke and Leif Borge

Condensed consolidated income statement

	Fourth Quarter		Full Year
NOK million	2015	2014	2015	2014
Operating revenues and other income	3 952	5 326	15 869	21 432
Operating expenses	(3 400)	(5 063)	(15 168)	(20 052)
Operating profit before depreciation, amortization and impairment (EBITDA)	552	262	702	1 380
Depreciation and amortization	(279)	(258)	(1 103)	(922)
Impairment	(615)	(107)	(1 758)	(1 164)
Operating profit (loss)	(342)	(102)	(2 159)	(706)
Net financial items	(171)	(396)	(691)	(947)
Profit (loss) before tax	(513)	(498)	(2 851)	(1 653)
Tax income (expense)	(124)	23	286	266
Profit (loss) from continuing operations	(638)	(475)	(2 564)	(1 387)
Net profit from discontinued operations	(23)	(27)	(23)	3 880
Profit (loss) for the period	(661)	(502)	(2 587)	2 493

Financials - Special Items

NOK million	Q4 normal business	Hedging	Real estate gain	Restructuring costs	Impairments	Sum one-offs	Q4 including all one-offs
EBITDA	231	53	310	(42)	-	321	552
Depreciation & amortization	(279)					-	(279)
Impairment	-	-		-	(615)	(615)	(615)
EBIT	(48)	53	310	(42)	(615)	(294)	(342)

Capital structure FUNDING

• Extended existing facilities to 2019
• New revolving facility of NOK 362.5 million due in 2017

Terms:

• ― NOK 600 million reduction in two years (2019 facilities)
• ― Certain restrictions on dividends, new debt and acquisitions

Financial Covenants:

• ― Gearing: Net Debt/ Equity < 1.0
• ― Minimum liquidity: NOK 750 million
• ― Interest coverage ratio: EBITDA/ net interest (see table)

Net Debt of NOK 4.9 bn as of Q4:

• ― Gross Debt of NOK 5.6 bn
• ― Cash of NOK 0.6 bn
• ― Interest bearing assets of NOK 0.1 bn

Liquidity reserve of NOK 2.6 bn

	SIZE	MATURITY	MARGIN
TERM LOAN	USD 422.5 million	July 2019	1.65%-4.5%
REVOLVING	NOK 2.0 billion	July 2019	1.65%-4.5%
REVOLVING	NOK 362.5 million	June 2017	1.65%-4.5%
BRAZIL FACILITY	BRL 129 million	December 2021	6.6% average cost

INTEREST COVERAGE RATIO

2016		2017
Q1	0.7	Q1	3.0
Q2	0.7	Q2	4.0
Q3	0.7	Q3	4.0
Q4	1.5	Q4	4.0

MHWirth

• Revenues down 37 percent in 2015 compared with 2014, revenues from life-cycle services down 5%
• EBITDA of NOK 1 million in the quarter including:
• Restructuring cost of NOK 33 million
• MPO loss of NOK 42 million
• Impairment of MPO assets NOK 488 million
• Order intake of NOK 1 108 million mainly from lifecycle services
• NCOA down NOK 682 million due to payments from customers

Revenue and EBITDA

NOK million

BUSINESS SPLIT YTD BASED ON REVENUE

AKOFS Offshore

• NOK million Skandi Santos with close to full utilization
• Aker Wayfarer worked for one month, then started conversion
• AKOFS Seafarer cold stacked in Q4, reducing opex to below USD 10 000 per day

Revenue and EBITDA

Revenue EBITDA

VESSEL PROGRAM

Frontica Business Solutions Fjords Processing

• Revenue of NOK 1 083 million in the quarter, down 27% compared with 2014 due to lower activity level of key clients

• EBITDA of NOK 64 million with a margin of 5.9 percent

• Revenues of NOK 582 million in Q4, down from NOK 690 million in 2014, mainly due to lower activity in North America

• EBITDA of NOK 60 million in Q4 compared with NOK 9 million in 2014
• Order intake of NOK 789 million in Q4

Revenue and EBITDA

NOK million

Revenue EBITDA

Revenue and EBITDA

NOK million

KOP Surface Products

• Revenues in NOK decreased by 36 % compared with corresponding quarter last year (50 % down in USD)
• EBITDA of NOK 52 million gave a margin of 24.3 % in the quarter
• Order intake of NOK 91 million in Q4

Real Estate and other holdings

• Real Estate portfolio sold for NOK 1 243 million
• Step Oiltools and First Geo: EBITDA of NOK -12 million
• Real Estate with EBITDA of NOK 312 million
• Effect from hedges not qualifying for hedge accounting of NOK 53 million

Revenue and EBITDA

NOK million

Revenue and EBITDA

NOK million

Agenda

FOURTH QUARTER HIGHLIGHTS Kristian Røkke CEO

FINANCIALS Leif Borge CFO

Q & A Kristian Røkke and Leif Borge

Additional information

Condensed consolidated income statement

	Fourth Quarter		Full Year
NOK million	2015	2014	2015	2014
Operating revenues and other income	3 952	5 326	15 869	21 432
Operating expenses	(3 400)	(5 063)	(15 168)	(20 052)
Operating profit before depreciation, amortization and impairment (EBITDA)	552	262	702	1 380
Depreciation and amortization	(279)	(258)	(1 103)	(922)
Impairment	(615)	(107)	(1 758)	(1 164)
Operating profit (loss)	(342)	(102)	(2 159)	(706)
Net financial items	(171)	(396)	(691)	(947)
Profit (loss) before tax	(513)	(498)	(2 851)	(1 653)
Tax income (expense)	(124)	23	286	266
Profit (loss) from continuing operations	(638)	(475)	(2 564)	(1 387)
Net profit from discontinued operations	(23)	(27)	(23)	3 880
Profit (loss) for the period	(661)	(502)	(2 587)	2 493

Consolidated balanced sheet

NOK million	December 31 2015	December 31 2014
Deferred tax assets	468	214
Intangible assets	2 785	3 122
Property, plant and equipment	6 480	6 469
Investment property	0	707
Other non-current operating assets	478	691
Other Investments	437	610
Non-current interest-bearing receivables	84	131
Total non-current assets	10 732	11 946
Current operating assets	9 171	11 204
Current interest-bearing receivables	72	205
Cash and cash equivalents	563	1 075
Total current assets	9 805	12 485
Total assets	20 537	24 430
Equity attributable to equity holders of Akastor ASA	7 386	9 378
Total equity	7 386	9 378
Deferred tax liabilities	51	483
Employee benefit obligations	434	473
Other non-current liabilities	414	285
Non-current borrowings	1 583	4 720
Total non-current liabilities	2 483	5 961
Current operating liabilities	6 613	8 782
Current borrowings	4 054	308
Total current liabilities	10 667	9 090
Total liabilities and equity	20 537	24 430

Key figures

AKASTOR GROUP

Amounts in NOK million	Q4 14	Q1 15	Q2 15	Q3 15	Q4 15	2014	2015
Operating revenue and other income	5 326	4 546	3 693	3 678	3 952	21 432	15 869
EBITDA	262	177	141	(169)	552	1 380	702
EBIT	(103)	(98)	(143)	(1 576)	(342)	(706)	(2 159)
CAPEX and R&D capitalization	360	1 127	280	107	146	1 098	1 659
NCOA	2 084	2 956	2 925	2 920	2 340	2 084	2 340
Net capital employed	12 656	14 777	14 710	14 297	12 087	12 656	12 087
Order intake	5 247	3 079	2 289	2 358	2 779	25 254	10 506
Order backlog	21 555	19 998	18 678	17 781	15 616	21 555	15 616
Employees	7 609	7 061	6 585	6 098	5 677	7 609	5 677

Split per company

MHWIRTH

Amounts in NOK million	Q4 14	Q1 15	Q2 15	Q3 15	Q4 15	2014	2015
Operating revenue and other income	2 711	2 174	1 619	1 422	1 529	10 681	6 743
EBITDA	241	3	3	(184)	1	941	(176)
EBIT	102	(107)	(103)	(351)	(642)	526	(1 204)
CAPEX and R&D capitalization	253	107	152	69	56	762	385
NCOA	2 298	2 839	2 887	2 934	2 252	2 298	2 252
Net capital employed	5 328	5 863	6 021	6 100	4 729	5 328	4 729
Order intake	1 569	788	932	692	1 108	6 941	3 521
Order backlog	9 566	7 659	7 110	6 410	5 750	9 566	5 750
Employees	4 237	3 990	3 694	3 334	3 005	4 237	3 005

FRONTICA

Amounts in NOK million	Q4 14	Q1 15	Q2 15	Q3 15	Q4 15	2014	2015
Operating revenue and other income	1 483	1 431	1 261	1 145	1 083	5 753	4 919
EBITDA	74	64	57	74	64	315	260
EBIT	49	38	31	45	33	218	147
CAPEX and R&D capitalization	56	17	8	5	13	110	43
NCOA	(237)	(119)	(298)	(426)	(303)	(237)	(303)
Net capital employed	374	493	300	187	267	374	267
Order intake	1 658	1 495	804	1 088	997	8 196	4 384
Order backlog	2 620	2 698	2 260	2 235	1 754	2 620	1 754
Employees	1 356	1 135	1 065	1 029	983	1 356	983

Split per company

AKOFS OFFSHORE

Amounts in NOK million	Q4 14	Q1 15	Q2 15	Q3 15	Q4 15	2014	2015
Operating revenue and other income	256	168	186	229	198	1 542	781
EBITDA	51	(24)	31	51	45	175	104
EBIT	(21)	(109)	(56)	(1 082)	(41)	(1 117)	(1 288)
CAPEX and R&D capitalization	3	967	61	13	17	5	1 057
NCOA	63	31	99	45	69	63	69
Net capital employed	4 374	5 563	5 567	5 171	5 284	4 374	5 284
Order intake	142	120	66	107	12	6 140	305
Order backlog	6 186	6 371	6 194	6 395	6 430	6 186	6 430
Employees	115	98	102	102	91	115	91

FJORDS PROCESSING

Amounts in NOK million	Q4 14	Q1 15	Q2 15	Q3 15	Q4 15	2014	2015
Operating revenue and other income	690	392	475	487	582	2 322	1 936
EBITDA	9	10	16	17	60	52	104
EBIT	1	2	7	7	51	25	67
CAPEX and R&D capitalization	36	8	13	9	15	62	44
NCOA	(131)	(97)	(70)	(4)	117	(131)	117
Net capital employed	463	515	532	618	715	463	715
Order intake	505	435	500	391	789	2 197	2 116
Order backlog	1 190	1 228	1 245	1 148	1 398	1 190	1 398
Employees	617	583	572	542	545	617	545

Split per company

KOP SURFACE PRODUCTS

Amounts in NOK million	Q4 14	Q1 15	Q2 15	Q3 15	Q4 15	2014	2015
Operating revenue and other income	335	324	255	338	214	1 119	1 131
EBITDA	46	65	59	67	52	156	242
EBIT	24	51	45	53	28	109	177
CAPEX and R&D capitalization	5	4	3	8	16	32	31
NCOA	375	420	410	442	240	375	240
Net capital employed	674	718	700	744	555	674	555
Order intake	330	216	138	108	91	1 052	553
Order backlog	659	590	466	264	149	659	149
Employees	854	848	736	693	682	854	682

REAL ESTATE AND OTHER HOLDINGS

Amounts in NOK million	Q4 14	Q1 15	Q2 15	Q3 15	Q4 15	2014	2015
Operating revenue and other income	375	292	113	227	558	975	1 190
EBITDA	(159)	58	(25)	(194)	329	(260)	168
EBIT	(258)	27	(66)	(249)	229	(469)	(59)
CAPEX and R&D capitalization	7	23	42	4	30	128	99
NCOA	(284)	(117)	(103)	(70)	(34)	(284)	(34)
Net capital employed	1 443	1 625	1 590	1 478	537	1 443	537
Order intake	1 653	210	46	105	319	2 097	679
Order backlog	1 658	1 728	1 660	1 545	412	1 658	412
Employees	430	407	416	398	372	430	372

Copyright and disclaimer

Copyright

Copyright of all published material including photographs, drawings and images in this document remains vested in Akastor and third party contributors as appropriate. Accordingly, neither the whole nor any part of this document shall be reproduced in any form nor used in any manner without express prior permission and applicable acknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction.

Disclaimer

This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Akastor ASA and Akastor ASA's (including subsidiaries and affiliates) lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for Akastor ASA. oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time in the Presentation. Although Akastor ASA believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Akastor ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Akastor ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.