Aker — Interim / Quarterly Report 2018

Jul 18, 2018

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Aker ASA Second-quarter and half-year results 2018

18 July 2018 | Fornebu

Highlights | Second quarter 2018

• Net asset value: up NOK 14.7 billion (34.6%) to NOK 57.1 billion
• Return: Aker share up 45.5%, dividend adjusted, to NOK 623 vs. OSEBX up 9.2%
• Cash and liquid fund inv.: NOK 1.4 billion, down from NOK 2.9 billion per end of first quarter. Liquidity reserve of NOK 4.5 billion when including undrawn credit facilities

▪ Aker events:

• i. Aker Energy: Completed the acquisition of Hess Ghana
• ii. Fornebuporten: Established property development company with Geveran and Joh Johannson Eiendom
• iii. Financing: NOK 500 million tap issue of AKER14

▪ Portfolio events:

• i. Akastor: USD 75 million investment in preferred equity in Odfjell Drilling Ltd, final agreement to form joint venture for AKOFS Offshore, and new contract for AKOFS Seafarer
• ii. Aker Solutions / Kvaerner: NOK 3.4 billion contract for modification of the riser platform and the field center for the Johan Sverdrup development Phase II
• iii. Aker BP: Awarded six new production licenses in Norway in the 24th licensing round
• iv. Ocean Yield: Acquisition of four container vessels on 12-year charters for USD 120 million

Aker BP the main contributor to the value increase in second quarter

Net asset value change in 2Q 2018 NOK billion

18 July 2018 AKER ASA | Second-quarter and half-year results 2018

Solid performance and a strong balance sheet

NAV per share vs. share price NOK per share

Net asset value composition NOK billion

1) Based on closing prices of Aker's listed holdings as per 17 July 2018, remaining assets and liabilities at reported book values per 30.06.18. Excluding cash movements in the third quarter

No major changes made to the portfolio

Portfolio composition NOK billion, as per 2Q 2018

						Listed investments Unlisted investments
Industrial Holdings					Financial Investments
	Aker BP	40.0%	43.3	1.2	Cash
	1)) Aker Solutions	34.8%	5.4	0.2	Liquid fund investments
	1)) Akastor	36.7%	1.8	1.3	Listed financial investments
	1) Kvaerner	28.7%	1.3	0.5	Real Estate Investments2)
	Ocean Yield	61.7%	7.0	1.8		Other financial investments2)
	2) Aker BioMarine	100.0%	2.4
	Gross asset value		61.2	5.1
	Net asset value			57.1

Gross asset value distribution Per 2Q 2018 (1Q 2018)

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

On track to deliver over NOK 2.0 billion in upstream cash in 2018

Investment capacity potential NOK billion

Upstream dividend NOK billion

Aker BP

Exploration & Production company on the Norwegian continental shelf

% of gross asset value

(2Q 2018)

Investment value of NOK 43.3 billion

Aker's ownership agenda

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

Aker's investment

NOK million
Value as per 31.03.18	30 567
Value change in 2Q	13 125
Received dividends	(362)
Value as per 30.06.18	43 330

USD million	2Q 17	2Q 18	1H 17	1H 18
Revenues	595	975	1 241	1 864
EBITDAX	470	810	988	1 522

Aker Solutions

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

% of gross asset value

(2Q 2018)

Investment value of NOK 5.4 billion

Aker's ownership agenda

• Increase competitiveness, reach cost-efficiency target of 50 per cent by 2021
• Win new contracts
• Partnerships, alliances and M&A

Aker's investment

NOK million
Value as per 31.03.18	3 920
Value change in 2Q	1 472
Value as per 30.06.18	5 392

NOK million	2Q 17	2Q 18	1H 17	1H 18
Revenues	5 425	6 254	10 598	11 737
EBITDA	305	439	660	864
Backlog			30 695	36 981

Akastor

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

% of gross asset value

(2Q 2018)

Investment value of NOK 1.8 billion

Aker's ownership agenda

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

Aker's investment

NOK million
Value as per 31.03.18	1 533
Value change in 2Q	268
Value as per 30.06.18	1 800

NOK million	2Q 17	2Q 18	1H 17	1H 18
Revenues	697	873	1 461	1 754
EBITDA	(7)	78	19	141
Backlog			7 112	9 540

Kvaerner

Oil and gas-related EPC company

% of gross asset value (2Q 2018)

Investment value of NOK 1.3 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 31.03.18 1 001 Value change in 2Q 326 Value as per 30.06.18 1 327

NOK million	2Q 17	2Q 18	1H 17	1H 18
Revenues	1 502	1 827	3 056	3 740
EBITDA	219	91	327	283
Backlog			9 041	11 204

Ocean Yield

A maritime assets company with focus on long-term contracts

% of gross asset value

(2Q 2018)

Investment value of NOK 7.0 billion

Aker's ownership agenda

• Growth by new investments and M&A
• Further diversify portfolio, both counterparty and segmentwise
• Optimise capital structure and reduce cost of capital
• Manage and mitigate counterparty risk

Aker's investment

NOK million
Value as per 31.03.18				6 484
Value change in 2Q				653
Received dividends (152)
Value as per 30.06.18				6 985
Key figures
USD million	2Q 17	2Q 18	1H 17	1H 18
Revenues	82	95	161	184
EBITDA	74	84	146	162
EBITDA backlog			2 900	3 600

Industrial Holdings Aker BioMarine

Integrated biotech company – specialised in krill harvesting and processing

% of gross asset value

(2Q 2018)

Investment value of NOK 2.4 billion

Aker's ownership agenda

• Operational excellence and improve profitability
• Increase sales by entering new products, channels and geographies
• Extract synergies from recent transactions
• New vessel and other investments to fast-track growth

Aker's investment

NOK million
Value as per 31.03.18 (book value)				1 411
Value change in 2Q				-
Loan converted to shares				1 000
Value as per 30.06.18 (book value)				2 411
Key figures
USD million	2Q 17	2Q 18	1H 17	1H 18
Revenues	30	44	57	79
EBITDA	6	16	9	19

Key developments in Aker Energy and Cognite

	Key developments Key developments
	▪ Formally approved as Operator and closing of Hess Ghana acquisition end May
	▪ Agreement to acquire Hess Ghana from Hess Corporation for USD 100 million, of which USD 75 ▪ Established presence in Accra with new office and country manager million payable on approval of PDO
	▪ ▪ Aker Energy team now comprising ~100 FTEs at Fornebu and in Accra Jan Arve Haugan appointed CEO, management in place
E&P company in Ghana (50% owned by Aker)	▪ ▪ Main workstreams related to preparing submission of Plan Of Development (POD) including firming up Board recruited and governance model established estimates of recoverable reserves, tender evaluations and field development strategy. ▪
	Organization scaled to ~80 skilled employees ▪ Follow up of alternatives for financing and necessary governmental permits based on postponed due date for POD until q4 2018

Aker Financial Investments

Financial Investments Overview

% of gross asset value (30.06.2018)

NOK billion

Financial Investments

Cash and Liquid fund investments

% of gross asset value

(30.06.2018)

• Cash decreased to NOK 1.2 billion:
• • NOK 544 million in dividends received
• • NOK 498 million from tap issue on AKER14 bond
• • NOK 614 million from realised assets
• NOK 1338 million in dividend paid
• NOK 1206 million in repayment of AKER11 bond
• NOK 224 million in loans issued to portfolio companies
• NOK 167 million in operating expenses and net interest paid
• • NOK 7 million in net other cash movements
• Liquid fund investments at NOK 164 million.
• Total liquidity reserve of NOK 4.5 billion, including undrawn credit facilities.

Financial Investments Listed financial investments

% of gross asset value (30.06.2018)

• Dividend received from AMSC of NOK 20 million.
• Value decrease of Philly Shipyard with NOK 96 million. Philly Shipyard continues to face order backlog challenges.

Source: Solstad Farstad

Aker's investment

NOK million	4Q 17	1Q 18	2Q 18
Philly Shipyard	492	455	358
AMSC (incl. TRS)	345	335	520
Cxense	30	23	25
Solstad Farstad	353	316	393
Total value	1 220	1 128	1 296

Financial Investments

Real estate and other financial investments

% of gross asset value (30.06.2018)

• Accounting gain for Aker of NOK 194 million and a cash release of NOK 361 million.
• NOK 1 billion of the loan to Aker BioMarine converted to shares in 2Q. Outstanding loan to Aker BioMarine of USD 19 million.

Aker's investment

NOK million	4Q 17	1Q 18	2Q 18
Real estate	674	694	538
Other financial investments	2 261	2 579	1 838
Total value	2 934	3 273	2 376

Aker Financial Statements

Aker ASA and holding companies Balance sheet at 30.06.2018

Aker ASA and holding companies Interest-bearing items as of 30.06.2018

0 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 10 000 Cash Interest-bearing debt of NOK 6.8 billion NOK million

Average debt maturity is 3.0 years For details of interest-bearing items and loan guarantees, see: https://www.akerasa.com/Investor/Treasury

Financial Covenants	Limit	Status at 30.06.2018
i Total Debt/Equity - Aker ASA (parent only)	< 80%	36%
ii Group Loans to NAV or Group Loans	< 50% < NOK 10 bn	1.1% NOK 0.3 bn

Aker ASA and holding companies Income statement

Amounts in NOK million	2Q 2017	2Q 2018	1H 2017	1H 2018	Year 2017
Sales gains	-	194	-	194	-
Operating expenses	(54)	(62)	(118)	(130)	(244)
EBITDA	(54)	132	(118)	64	(244)
Depreciation and impairment	(4)	(4)	(7)	(8)	(14)
Value change	(392)	526	(258)	347	(289)
Net other financial items	249	519	693	1 035	1 380
Profit before tax	(201)	1 173	310	1 438	833

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.