Aker — Interim / Quarterly Report 2017

Jul 18, 2017

Proud ownership

Aker ASA Second-quarter and half-year results 2017

18 July 2017 | Fornebu

Highlights | Second-quarter 2017

• Net asset value: down 7.9%, dividend adjusted, to NOK 28.8 billion (NOK 32.6 billion)
• Return: Aker share down 12.7%, dividend adjusted, to NOK 274 vs. OSEBX up 1.6%
• Dividend: Distribution of NOK 16 per share dividend for 2016
• Cash and liquid fund inv.: NOK 2.1 billion, down from NOK 4.3 billion in the first quarter

▪ Aker transactions:

i. Financing: Repayment of the NOK 500 million AKER07 bond

▪ Portfolio transactions:

• i. Akastor: Sale of KOP Surface Products to the Weir Group
• ii. Aker BP: Issuance of a USD 400 million US high-yield bond
• iii. Ocean Yield: Investments in two PSVs and one Suezmax tanker
• iv. Aker BioMarine: Acquisition of the harvesting vessel Juvel
• v. Solstad Farstad: Completion of merger between Solstad Offshore, Farstad Shipping and Deep Sea Supply

NAV decreased 11.5% in 2Q 2017 and 7.9% dividend adjusted

Net asset value change in 2Q 2017 NOK billion

Total return portfolio companies in 2Q 2017

Percentage change, adjusted for dividends

18 July 2017 AKER ASA | Second-quarter and half-year results 2017

Share price up 36.5% year-on-year, dividend adjusted, despite a 12.7% decrease in Q2

NAV per share vs. share price NOK per share

Net asset value composition NOK billion

Dividend

NAV per share

Share price (adjusted for dividends paid in Q2 2017)

Portfolio distribution largely unchanged

Portfolio composition NOK billion, as per 2Q 2017

					Listed investments Unlisted investments
Industrial Holdings					Financial Investments
Aker BP	40.0%	16.7	1.6	Cash
Aker Solutions 1))	34.8%	3.6	0.4	Liquid fund investments
Akastor 1))	36.7%	1.4	1.5	Listed financial investments
1) Kvaerner	28.7%	0.8	0.5	Real Estate Investments2)
Ocean Yield	66.2%	6.4	1.7	Other financial investments2)
2) Aker BioMarine	100.0%	1.4
Gross asset value		30.2	5.8
Net asset value			28.8

Gross asset value distribution Per 2Q 2017 (1Q 2017)

1)Owned partly through Aker Kvaerner Holding, in which Aker has a 70% ownership interest. Additionally, Aker has a direct ownership interest in Aker Solutions and Akastor 2)Reflected at book value

Ample investment capacity and continued strong upstream cash generation

Investment capacity potential NOK billion

Upstream dividend NOK billion

Aker Industrial Holdings

Industrial Holdings Aker BP

Exploration & Production company on the Norwegian continental shelf

% of gross asset value

(2Q 2017)

Investment value of NOK 16.7 billion

Aker's ownership agenda

• Growth; organic (greenfield projects, IOR and exploration) and through M&A
• Quarterly dividend payments
• Operational excellence and efficiency improvements through new business models and technologies, including digitalisation

NOK million
Value as per 31.03.17				18 590
Value change in 2Q	(1 695)
Received dividends (210)
Value as per 30.06.17 16 685
Key figures
USD million	2Q 16	2Q 17	1H 16	1H 17
Revenues	256	595	461	1 241
EBITDAX	211	470	376	988

Industrial Holdings Aker Solutions

Global oil services company providing services, technologies, and product solutions within subsea and field design

% of gross asset value

(2Q 2017)

Investment value of NOK 3.6 billion

Aker's ownership agenda

• Increase competitiveness and reduce costs by NOK 9 billion across the business versus 2015 cost base
• Win new contracts
• Partnerships, alliances and M&A

Aker's investment

NOK million
Value as per 31.03.17	4 894
Value change in 2Q	(1 328)
Value as per 30.06.17	3 566

Key figures

NOK million	2Q 16	2Q 17	1H 16	1H 17
Revenues	6 969	5 425	13 432	10 598
EBITDA	563	305	1 072	660
Backlog			35 008	30 695

Industrial Holdings

Akastor

Oilfield services investment company with a flexible mandate for longterm value creation

% of gross asset value

(2Q 2017)

Investment value of NOK 1.4 billion

Aker's ownership agenda

• Operational excellence, cost reductions
• Win new contracts
• Transactions

Aker's investment

NOK million
Value as per 31.03.17	1 302
Value change in 2Q	80
Value as per 30.06.17	1 383

Key figures

NOK million	2Q 16	2Q 17	1H 16	1H 17
Revenues	1 326	873	2 556	1 816
EBITDA	(135)	18	(197)	71
Backlog			8 182	7 112

Industrial Holdings Kvaerner

Oil and gas-related EPC company

% of gross asset value

(2Q 2017)

Investment value of NOK 0.8 billion

Aker's ownership agenda

• Enhance competitiveness through operational excellence and cost reductions
• Win new contracts
• Maintain strong balance sheet

Aker's investment

NOK million
Value as per 31.03.17	834
Value change in 2Q	(46)
Value as per 30.06.17	788

Key figures

NOK million	2Q 16	2Q 17	1H 16	1H 17
Revenues	1 859	1 502	4 087	3 056
EBITDA	96	219	177	327
Backlog			10 172	9 041

Industrial Holdings Ocean Yield

A maritime assets company with focus on long-term contracts

% of gross asset value

(2Q 2017)

Investment value of NOK 6.4 billion

Aker's ownership agenda

• Growth by incremental, accretive investments
• Further diversify portfolio, both counterparty and segmentwise
• Optimise capital structure and reduce cost of capital
• Manage and mitigate counterparty risk

NOK million
Value as per 31.03.17				5 993
Value change in 2Q
Received dividends (152)
Value as per 30.06.17 6 410
Key figures
USD million	2Q 16	2Q 17	1H 16	1H 17
Revenues	70	82	136	161
EBITDA	63	74	122	146
EBITDA backlog			3 300	2 900

Industrial Holdings Aker BioMarine

Integrated biotech company – specialised in krill harvesting and processing

% of gross asset value

(2Q 2017)

Investment value of NOK 1.4 billion

Aker's ownership agenda

• Operational excellence
• Increase sales by entering new products, channels and geographies
• New vessel and other investments to fast-track growth

NOK million
Value as per 31.03.17 (book value)				1 405
Value change in 2Q
Investments
Value as per 30.06.17 (book value)
Key figures
USD million 2Q 16 2Q 17 1H 16 1H
Revenues	27	30	53	57
EBITDA	11 6 18 9

Aker Financial Investments

Financial Investments Overview

% of gross asset value NOK billion (30.06.2017)

• Cash and liquid fund investments at NOK 2.1 billion
• Debt repayments of NOK 0.7 billion and dividend payment of NOK 1.2 billion
• USD bank loan: maturity extended to 2020 with option to redraw the loan to the original amount of USD 250 million
• Merger completed between Solstad Offshore, Farstad Shipping and Deep Sea Supply

Financial Investments

Other financial investments Real estate

Cash

Listed financial investments

Liquid fund investments

Financial Investments

Cash and Liquid fund investments

% of gross asset value

(30.06.2017)

Value of NOK 2.1 billion

• Cash decreased to NOK 1.6 billion:
• • NOK 376 million in dividends received
• NOK 1 188 million in dividend paid
• NOK 730 million in debt repayments (incl. call premium)
• NOK 380 million loan issued to Aker BioMarine
• NOK 283 million in misc. investments
• NOK 150 million in operating expenses and net interest paid
• • NOK 65 million in net other cash movements
• Liquid fund investments at NOK 422 million
• Total liquidity reserve of NOK 3.7 billion, including undrawn credit facilities

Financial Investments Listed financial investments

% of gross asset value (30.06.2017)

• Completion of the merger between Solstad Offshore, Farstad Shipping and Deep Sea Supply, including NOK 250 million loan conversion into shares
• Value of Philly Shipyard increased by NOK 183 million
• Total value of AMSC exposure decreased by NOK 108 million
• Dividends received of NOK 20 million

NOK million	4Q 16	1Q 17	2Q 17
Philly Shipyard	447	414	597
AMSC (incl. TRS)	295	432	324
Cxense	66	47	37
Solstad Farstad	247	459	562
Total value	1 055	1 353	1 520

Financial Investments

Real estate and other financial investments

% of gross asset value (30.06.2017)

• Increased investment in Fornebuporten of NOK 133 million
• USD 45 million loan issued to Aker BioMarine
• Loan repayment from AMSC of NOK 55 million
• NOK 250 million convertible loan to Solstad Offshore converted to equity

NOK million	4Q 16	1Q 17	2Q 17
Real estate (incl. receivable)	426	376	509
Other financial investments	1 594	1 517	1 742
Total value	2 020	1 893	2 251

Aker Financial Statements

Aker ASA and holding companies Balance sheet

Interest-bearing items and loan guarantees

Interest-bearing debt (MNOK)	Loan amount	Outstanding	Maturity
Bond AKER 11	1 300	1 300	2018
Bond AKER 12	1 489	1 489	2019*
Bond AKER 13	1 000	1 000	2020
Bond AKER 10	700	700	2020
Bond AKER 09	1 000	1 000	2022
Bank loan (RCF)	1 000	0	2020**
Capitalised loan fees etc.	(21)	(21)
Total Aker ASA	6 468	5 468
Bank loan Aker Capital (USD denominated)	2 097	1 468	2020***
Capitalised loan fees etc.	(8)	(8)
Total Aker ASA and holding companies	8 557	6 928

* MSEK 1 500 issue **Maturity in 2020 with 1 year uncommitted extension option

*** Maturity in 2020 with 1 year uncommitted extension option. Total facility amount of MUSD 250, of which MUSD 175 was drawn at June 30, 2017.

Loan guarantees	1Q 2017	2Q 2017
Aker BioMarine	305	305
Ocean Harvest	56	52
Other	3	3
Total	364	360

Average debt maturity is 2.8 years

Financial Covenants	Limit	Status per 30.06.2017
i Total Debt/Equity - Aker ASA (parent only)	< 80%	37%
ii Group Loans to NAV or Group Loans	< 50% < NOK 10 bn	2.4% NOK 0.7 bn

Aker ASA and holding companies Income statement

Amounts in NOK million	2Q 2016	2Q 2017	1H 2016	1H 2017	Year 2016
Sales gains	90	-	278	-	1 906
Operating expenses	(48)	(54)	(108)	(118)	(198)
EBITDA	42	(54)	171	(118)	1 708
Depreciation and impairment	(21)	(4)	(26)	(7)	(32)
Value change	326	(392)	11	(258)	(8)
Net other financial items	395	249	503	693	950
Profit before tax	742	(201)	659	310	2 617

Disclaimer

• This Document 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 Document 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 Aker ASA and Aker 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 Aker's businesses, 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 Document. Although Aker ASA believes that its expectations and the Document 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 Document. Aker ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Document, and neither Aker ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.
• The Aker group consists of many legally independent entities, constituting their own separate identities. Aker is used as the common brand or trade mark for most of this entities. In this document we may sometimes use "Aker", "Group, "we" or "us" when we refer to Aker companies in general or where no useful purpose is served by identifying any particular Aker company.