AKVA Group — Investor Presentation 2010

Apr 29, 2010

AKVA GROUP™

The global leader in aquaculture technology

1Q 2010 presentation

29 April 2010

Knut Molaug, CEO

Morten Nærland, CFO

akvasmart™

fishtalk™

wavemaster™

polarcirkel™

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AKVA GROUP™

Agenda

• Background & highlights
• 1Q 2010 Financial review
• Outlook
• Q & A

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Global leader in aquaculture technology. Nothing more. Nothing less.

AKVA life
2008-2015

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AKVA GROUP

AKVA group in brief

Cage systems

Facts about AKVA group

• The leading supplier of aquaculture technology.
• Strong market position for all main products
• The only supplier with "global" presence.
• Leading supplier in a global growth industry.

Software systems & services

Feed barges

Recirculation systems

Feed systems

Sensors & operational

AKVA's main product brands:

wavemaster

polarcirkel

fishtalk

akvasmart

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AKVA GROUP

"One-stop-shop" in aquaculture technology

Value Chain Software

Programvare for oppdrett

Programvare for sjømat

Land Based Farms

Cage Based Farms

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AKVA GROUP

1Q highlights

• Operating revenues in 1Q were 158.0 MNOK versus 152.4 MNOK last year.
• The EBITDA in 1Q was 0.5 MNOK versus -3.3 MNOK last year.
• Order backlog at the end of 1Q2010 was 260 MNOK which is approximately 30% higher than last year.
• The order inflow in 1Q was 140% higher than last year.

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AKVA GROUP™

1Q highlights

• Changes to the organisation made in 2010:
• Morten Nærland appointed Chief Financial Officer (CFO)
• From earlier temporary position
• Jone Gjerde appointed Chief Technical Officer (CTO)
• From the position as PRU Manager for Hardware
• Per Andreas Hjetland appointed as Manager for PRU Hardware
• From position as manager for Service and After Sales in PRU Hardware.

PRU = Product Responsible Unit,

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AKVA GROUP™

New Management Structure

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AKVA GROUP™

Agenda

• Background & highlights
• 1Q 2009 Financial review
• Outlook
• Q & A

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AKVA GROUP

1Q Financials – P&L

akvasmart

RESULTATREGNSKAP / INCOME STATEMENT	2010	2009	2009
(NOK 1 000)	1Q	1Q	Total
OPERATING REVENUES	158 023	152 379	599 345
Operating costs ex depreciations	157 503	155 662	610 872
OPERATING PROFIT BEFORE DEPRECIATIONS (EBITDA)	520	-3 284	-11 527
Depreciation	7 510	7 838	30 866
OPERATING PROFIT (EBIT)	-6 990	-11 122	-42 392
Net interest expense	-2 360	-1 823	-8 781
Other financial items	187	377	-830
Net financial items	-2 173	-1 446	-9 611
PROFIT BEFORE TAX	-9 162	-12 568	-52 003
Taxes	-3 843	-3 740	-12 875
NET PROFIT	-5 320	-8 828	-39 128
Revenue growth	3,7 %	-26 %	-30,8%
EBITDA margin	0,3 %	-2,2 %	-1,9 %
Earnings per share	-0,31	-0,51	-2,27
Average number of shares outstanding (in 1 000)	17 223	17 223	17 223

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AKVA GROUP

1Q Financials – P&L comments

• Operating revenue in 1Q10 was 158 MNOK.
• The quarterly revenue was slightly up compared to 1Q 2009.

• Continued low revenues due to restrictive investment programs by the customers

• The EBITDA result was 520 KNOK

• The EBITDA result was negatively affected by continued low volumes.
• Cost level has been reduced compared to last year

akvasmart

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AKVA GROUP

Market segments

Geographic segments (YTD)

• Norway is the dominating segment
• The UK and other markets are showing a positive development
• Chilean market continue to reduce it's importance.

Product Group Segments (YTD)

• HW = Hardware deliveries and services
• Cages, barges, Feed Systems and other operational systems
• SW = Software and software systems
• REC = Recirculation systems

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AKVA GROUP

Market segments

AKVA group revenues within other species
* Sales and order backlog for delivery in 2010 per 1Q.

• The positive development within other species than salmon continue.
• Major contract for delivery of 3 complete cage farms to Cromaris in Croatia was signed in 2Q (54 MNOK).

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AKVA GROUP

Balance sheet

| BALANCE SHEET
(NOK 1 000) | 2010
31.3. | 2009
31.3. | 2008
31.12. |
| --- | --- | --- | --- |
| Intangible fixed assets | 245 039 | 255 847 | 243 920 |
| Fixed assets | 38 034 | 42 632 | 39 071 |
| Long-term financial assets | 1 043 | 1 593 | 1 069 |
| FIXED ASSETS | 284 116 | 300 072 | 284 061 |
| Stock | 133 312 | 139 397 | 116 248 |
| Trade receivables | 152 390 | 162 997 | 125 391 |
| Other receivables | 27 635 | 18 155 | 27 477 |
| Cash and cash equivalents | 43 571 | 39 783 | 58 161 |
| CURRENT ASSETS | 356 908 | 360 333 | 327 277 |
| TOTAL ASSETS | 641 024 | 660 405 | 611 338 |
| Paid in capital | 267 087 | 267 087 | 268 815 |
| Retained equity | -16 651 | 32 756 | -12 175 |
| TOTAL EQUITY | 250 436 | 299 843 | 256 640 |
| Other long term debt | 5 470 | 9 602 | 5 561 |
| Long-term interest bearing debt | 150 714 | 112 780 | 150 651 |
| LONG-TERM DEBT | 156 184 | 122 382 | 156 212 |
| Short-term interest bearing debt | 26 710 | 85 782 | 49 364 |
| Other current liabilities | 207 695 | 152 398 | 149 123 |
| SHORT-TERM DEBT | 234 405 | 238 180 | 198 487 |
| TOTAL EQUITY AND DEBT | 641 024 | 660 405 | 611 338 |
| Equity ratio | 39.1% | 45.4% | 42.0% |
| Net Interest Bearing Debt (KNOK) | 133.9 | 158.8 | 141.9 |
| Net Working Capital (KNOK) | 105.6 | 168.2 | 120.0 |

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AKVA GROUP

Balance sheet items

Working Capital (MNOK)

NIBD (MNOK)

Working Capital:

• Further improvement seen in the working capital in 1Q.
• The company continue to focus on maintaining a low working capital.

Net interest bearing debt (NIBD):

• A waiver extending through 2Q 2010 relating to the financial covenants was agreed with the company's main bank in 4Q09

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AKVA GROUP

Financial position

akvasmart™

• Equity:

• Sound equity position

• Cash Position:

• Available cash 86 MNOK

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AKVA GROUP

Cash flow statement

| CASH FLOW STATEMENT
(NOK 1 000) | 2010
1Q | 2009
1Q | 2009
Total |
| --- | --- | --- | --- |
| Net cash flow from operational activities | 11 760 | -6 344 | 32 656 |
| Net cash flow from investment activities | -4 194 | -5 037 | -24 095 |
| Net cash flow from financial activities | -22 156 | 3 282 | 1 717 |
| Net cash flow | -14 590 | -8 100 | 10 277 |
| Cash and cash equivalents at the beginning of the period | 58 161 | 47 883 | 47 883 |
| Cash and cash equivalents at the end of the period | 43 571 | 39 783 | 58 161 |

• Investments in 1Q amounted to 4.4 MNOK whereof 1.7 MNOK is capitalized R&D expenses in accordance with IFRS.

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polarcirkel

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AKVA GROUP

Agenda

Background & highlights

• 1Q 2010 Financial review
• Outlook
• Q & A

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AKVA GROUP

Order backlog and inflow

Order backlog (MNOK)

• The order backlog was 260 MNOK at the end of 1Q.
• Up 30% compared to same period last year.
• Up 27% compared to previous quarter.

Order inflow (MNOK)

• Order inflow was 214 MNOK in 1Q.
• Up 140% compared to same period last year.
• Up 48% compared to previous quarter.

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AKVA GROUP

Outlook

Investment climate

• The market fundamentals for AKVA’s main customers remain favourable and the customers experience healthy earnings.
• The balance between supply and demand for Atlantic salmon, the product of AKVA group’s main customers, is expected to be favourable through 2010 and 2011. This indicating healthy prices.
• Still investments by AKVA’s customers is dominated by uncertainty.

Market development

• A positive shift in order inflow was seen in December 2009.
• The order inflow continued to develop positively also in 1Q 2010.
• Closing of contracts is still slow but market conditions seem to be gradually improving.

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AKVA GROUP

Outlook

• High underlying demand in Norwegian salmon market
• The Norwegian salmon industry is showing good profits at present and are positive for the outlook for the coming years.
• However, the investment level of the industry is still at a considerably lower level than earlier years.

• The market for recirculation systems in Norway is developing well and is a product area expected to show a positive development over the next year.

• Other species / markets

• The growth towards other species than salmon continue to expand according to strategic objectives.
• The signing of a contract of 54 MNOK with the company Cromaris (Croatia) is confirming this positive trend.
• The global financial has added uncertainty also to these markets, but there are signs that the uncertainty is now easing of.

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AKVA GROUP™

Agenda

• Background & highlights
• 1Q 2010 Financial review
• Outlook
• Q & A

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AKVA GROUP

AKVA group – global presence

All major industry players as customers

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AKVA GROUP

AKVA group – brief historic summary

1974: World’s fist plastic cages (Polarcirkel) – today more than 40.000 units delivered
1978: First Seafood industry software solution
1980: World’s first automatic feed systems
1984: Maritech: first seafood industry PC based ERP software system
1985: First Wavemaster steel cages
1992: World’s first software system for fish farm planning
1995: First fish pellet sensing system
1997: First Steel barges
2000: Polarcirkel – large cage designs introduced
2001: Introduction of AkvaMaster feed barges
2002: Akvasmart – integrated control system (CCS)
2004: Fishtalk–fist aquaculture integrated software system
2005: Wavemaster – introduction of 40 x40 steel cages
2006: Akvasmart – integrated sensor system
2007: 10 new products launched at Aquanor show
2008: UNI recirculation–“all in all out” concept

1980 1985 1990 1995 2000 2005

1980: First AKVA deliveries
1982: AKVA incorporated as company
1990s: International expansion through distributors and agents
1995: First International investment (Canada)
1998: Open subsidiaries in Chile and Scotland
2001: Aquasmart International AS (No)
2001: Superior Systems AS (No)
2002: Vicass (Ca)
2003: Feeding Systems AS (No,Ch)
2004: Cameratech AS (No)
2006: Akva kompetanse AS (No)
2006: Wavemaster Group (UK, Ca, Ch)
2006: Helgeland Plast (No, Ch)
2006: IPO – company listed at Oslo Stock Exchange
2007: Maritech International AS (No, Is, US, Ca, Ch)
2007: UNI Aqua AS (Dk)
2008: Danaq Amba (Dk)
2008: Open office in South East Asia (Thai)
2008: Idema Aqua AS (No, UK, Ch)